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Payment banks can convert into small finance banks after 5 years

A minimum Rs 200 crore net worth is needed for the license of small finance bank, RBI said.

Dec 05, 2019, 07.30 PM IST
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NEW DELHI: The Reserve Bank of India (RBI) on Thursday issued revised guidelines for ‘on tab’ licensing of small finance banks (SFB). It said payment banks can apply for conversion into SFBs after five years of operations.

The apex bank also highlighted that a minimum Rs 200 crore net worth is needed for the license of small finance bank.

“Primary (Urban) Co-operative Banks (UCBs), desirous of voluntarily transiting into SFBs initial requirement of net worth shall be at Rs 100 crore, which will have to be increased to Rs 200 crore within five years from the date of commencement of business. Incidentally, the net-worth of all SFBs currently in operation is in excess of Rs. 200 crore,” it also said in a release.

The central bank also said that small finance banks will be given scheduled bank status immediately upon commencement of operations. Payments banks can apply for conversion after five years of operations if they are eligible as per revised guidelines.

Since 2014, the Reserve Bank issued in-principle approval to ten applicants and they have established the banks.

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