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

About me

ramandeep singh

My name is Ramandeep Singh. I authored the Quantitative Aptitude Made Easy book. I have been providing online courses and free study material for RBI Grade B, NABARD Grade A, SEBI Grade A and Specialist Officer exams since 2013.

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