Dos and don'ts of small finance banks

Quick check of what the small finance banks will and will not be allowed to do

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Reserve Bank of India (RBI) has granted in-principle licence for small finance banks to ten entities.

The name of the applicants that have been granted the licence include Au Financiers, Capital Local Area Bank , Disha Microfin, Equitas Holdings, ESAF Microfinance and Investments, Janalakshmi Financial Services, RGVN (North East) Microfinance, Suryoday Micro Finance, Ujjivan Financial Services and Utkarsh Micro Finance.

DETAILED STORY: RBI grants small finance banks licence to 10 entities

Here is what they will and won't be allowed to do:

CAN DO:

• Undertake basic banking activities of acceptance of deposits and lending 

• Can lend only for financial inclusion including small business units, small and marginal farmers, micro and small industries and unorganised sector entities
   
• Allowed to distribute mutual fund products, insurance products and pension products

CAN'T DO: 

• Not allowed to set up subsidiaries to undertake non-banking financial activities
   
• Other financial and non-financial services activities of the promoters should not be mingled with the working of the bank