RBI Rejects Three Applications for Small Finance Banks; Remaining Applications Under Examination

The Reserve Bank of India (RBI) has rejected three applications for setting up small finance banks.

In a statement released on Tuesday, it stated that these applications had been rejected as unsuitable for giving in-principle authorisation to establish small financing institutions.

The Reserve Bank of India (RBI) has received approximately twelve applications for the establishment of banks under the guidelines for 'on tap' Licensing of Universal Banks and Small Finance Banks (SFBs). Last year in May, the RBI made decisions regarding six of these applications.

Recently, the central bank has completed the examination of three additional applications for setting up small finance banks in accordance with the prescribed procedure and existing guidelines.
The applicants "not found suitable" for the granting of in-principle authorisation to establish a small finance bank are Akhil Kumar Gupta, Cosmea Financial Holdings Pvt Ltd, and West End Housing Finance Ltd, according to the evaluation of the applications, it added.
The remaining applications are being examined, the central bank added.
Guidelines for 'on tap' licensing of Universal Banks and SFBs in the private sector were released on August 1, 2016, and December 5, 2019, respectively.
The initial minimum paid-up voting equity capital for a universal bank should be Rs 500 crore, according to the regulations. After that, the bank must always have a net worth of at least Rs 500 crore. SFBs shall have a minimum of Rs 200 crore in paid-up voting capital or net worth.
The initial net value criterion for urban cooperative banks seeking to voluntarily transition into SFBs is Rs 100 crore, which must be enhanced to Rs 200 crore within five years.