PRESENTED BY:

PRESENTATION OUTLINE

INTRODUCTION OF TOPIC

POLICIES IN PAYMENT & SMALL FINANCE BANK

PROCEDURE FOR LICENSING OF SMALL FINANCE & PAYMENT BANKS

MAJOR CONTENDERS

RESTRICTIONS/CHALLENGES FOR SMALL FINANCE AND PAYMENTS BANKS

CONCLUSION

INTRODUCTION

RBI had piloted the idea of payment and small banks

to extend basic banking to millions who didn’t have access

to banking and financial services. Encouraging alliances for

starting payment banks.

Objective of payments banks is to increase financial

inclusion by providing small savings accounts,

payment/remittance services to migrant labour, low

income households, small businesses.

PROCEDURE FOR LICENSING OF SMALL

FINANCE & PAYMENT BANKS

An external advisory committee (EAC) comprising eminent

professionals will evaluate the applications.

The EAC will give suggestions, but the final decision of issuing in-principle approvals will be taken by RBI.

The validity of the in-principle approvals will be 18 months

MAJOR CONTENDERS

MAJOR CONTENDERs

UAE Exchange

ESAF Microfinance

Capital Area Local Bank

Coastal Local Area Bank

RIL, India’s largest private sector group, said it had set

up a joint venture with State Bank of India (SBI), the

country’s largest bank, which would hold up to 30 per cent

stake. “The payment bank will leverage SBI’s nationwide

distribution network and risk-management capabilities.

Aditya Birla Nuvo, the largest shareholder in Idea Cellular,

plans to own 51 per cent of its proposed payment bank, while

Idea will own the rest. Later, Idea could raise its holding to 60

per cent.

Future Group said the banking entity, to be called NuFuture

Payments Bank, would work towards extending RBI’s mandate

of financial inclusion by focusing on the group’s core

consumer groups that included women, migrant workers, self-

employed people, farmers and local entrepreneurs.

RESTRICTIONS/CHALLENGES FOR SMALL

FINANCE AND PAYMENTS BANKS

Small finance banks:

Will need to ensure 75 per cent of its loans are in priority sectors

Will need to focus on small loans; at least 50 per cent of loan

portfolio must have advances of up to Rs 25 lakh

Annual branch expansion plans need prior approval of RBI for initial

five years

Will not be allowed to set up subsidiaries to undertake non-banking

financial services

CONT.

Payment banks: Such entities will be allowed to hold up to Rs 1 lakh per individual

customer initially

Will not be allowed to accept deposits from non-resident Indians

Will not be permitted to issue credit cards and offer loans

Will not be allowed to set up subsidiaries to undertake non-banking

financial services