RBI’s guidelines for licensing

For Payments and Small Finance Banks

The guidelines aim at creating a banking entity which is adequately capitalized, financially inclusive and has a competitive business model.

Overview of Payments Bank License

RBI released the final guidelines for Payments Banks on 27 November 2014. Read Deloitte India’s point of view on how a Payments Bank is an attractive opportunity; what benefits and limitations it offers to prospective clients; the key business model considerations for a Payments Bank; and the overall structured approach that will help an applicant secure the license.

  •  In September 2013, the RBI constituted a committee to study ‘Comprehensive financial services for small businesses and low income households’ headed by Dr. Nachiket Mor. The focus of the committee was to recommend innovative solutions to the RBI to accelerate financial inclusion in unbanked and under-banked sections of the society in sustainable and cost effective way.
  • The committee submitted its report to the RBI report in January 2014. One of the key recommendations of the committee was to introduce specialized banks (‘Payments Bank’) to cater to the lower income groups and small businesses. The report also provided high level criteria to assess ‘Fit and Proper’ status of the Payments bank license aspirants.
  • The draft guidelines for setting up Payments Bank were issued by the RBI in July 2014, and comments were sought from various participants by August 2014. Finally, the RBI has released the final guidelines for licensing of Payments Bank on November 27, 2014 keeping the application submission deadline as January 16, 2015.

Overview of Small Finance Banks License Guidelines

Learn more about what is included within RBI’s guidelines for licensing Small Finance Banks and Deloitte India’s broad analysis on what the guidelines mean for promoters and customer segments; what will the evaluation process involve; what will be the procedure for granting the license; and what are a few considerations for the applicants.

  • In August 2013, RBI published a policy discussion paper on ‘Banking Structure in India – The way forward’. One of the observations in the discussion paper was that there is merit in considering access to bank credit and services through expansion of Small Banks in unbanked and under-banked regions of India
  • Subsequently in July 2014, RBI published draft guidelines for setting up Small Bank in the private sector and invited comments and suggestions from various participants by August 2014.
  • Post reviewing the comments RBI has published the guidelines for Small Finance Bank and has invited applications by January 16, 2015


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