The Reserve Bank of India has selected 10 companies to set up small banks aimed at giving loans to those who struggle to get finance from traditional banks, including farmers and small businesses. The licensing of small finance banks follows 11 payments bank licenses given out by RBI last month. Both initiatives are aimed at furthering financial inclusion in the economy. Small businesses throughout the world need to be supported as they try and build on their brand, so assistance like this is necessary. Take Florida businesses for example, they will check out something like the best bank for small business in florida so they can be helped with their finances and keep on top of their incomings and outgoings which can aid them in running their business in an effective way. There is a strong need for banks to be able to handle small businesses, which is why it is important that everywhere has this option.
The name of the applicants that have been granted the licence include,
- Au Financiers
- Capital Local Area Bank
- Disha Microfin
- Equitas Holdings
- ESAF Microfinance and Investments
- Janalakshmi Financial Services
- RGVN (North East) Microfinance
- Suryoday Micro Finance
- Ujjivan Financial Services
- Utkarsh Micro Finance.
It should be noted that big names such as DHFL, IIFL Holdings, SKS Microfinance and UAE Exchange & Financial Services among others failed to make the cut.
Existing non-bank finance companies, local area banks and micro-finance institutions were eligible to apply for the small finance bank permits. In total, 72 entities including microfinance institutions to non-banking financial companies (NBFCs) and individuals, had applied for a licence. The applications were reviewed by a committee headed by former RBI deputy governor Usha Thorat.
- The minimum capital requirement would be Rs 100 crore.
- The bank shall primarily undertake basic banking activities of accepting deposits and lending to small farmers, small businesses, micro and small industries, and unorganised sector entities.
- It cannot set up subsidiaries to undertake non-banking financial services activities.
- After the initial stabilisation period of five years, and after a review, the RBI may liberalise the scope of activities for Small Banks.
- For the first three years, 25 per cent of branches should be in unbanked rural areas.