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RBI allowed Payment Banks to apply for Small finance banks

Published on September 18, 2019
Current context: RBI has allowed the Payments banks to apply for Small Finance Bank (SFB) licences through the “on tap licensing”.
RBI allowed Payment Banks to apply for Small finance banks  
  • Under the “on tap licensing”, the criteria that the promoter of a payment bank have to meet to set up an SBF is that both banks come under the non-operating financial holding company (NOFHC) structure.
  • The SFB licence to the payments banks will allow them to boost deposits and lend, that is currently capped at Rs 1 lakh per customer.
  • The minimum paid-up capital requirement for SFBs is also revised by the RBI from Rs 100 crore to now Rs 200 crore.
  • Promoter’s shareholding should be a maximum of 40% by the end of 5 years, and within 10years it should be down to 30% and within 15years it should be down to 15% shareholding.
  • Promoters could exit from the bank after the lock-in period of 5years.
  • RBI also allowed primary urban cooperative banks to convert into SFBs with a minimum net worth of such SFBs Rs100 crore and to be increased to Rs 200 crore within 5 years.
  • SFB offers basic banking services, accepting lending and deposits to underserved and unserved sections, including small and marginal farmers, unorganized sector, small businesses, micro and small industries.

Question: 

Q.1 RBI has recently allowed ______ to apply for Small Finance Bank (SFB) licences through the “on tap licensing”?
a. NBFCs
b. Payment Banks
c. Core Investment Companies
d. NABARD
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