Norms later this year on differentiated licences: RBI

Till now, RBI only grants full banking licence which are given within a particular time frame

Guidelines on differentiated and “on tap” banking licences would be issued later this year, Reserve Bank of India Deputy Governor R Gandhi said on Friday.

Till now, RBI has granted only a full banking licence within a particular time frame.

For example, in the previous licensing process, for which norms were issued in February 2013, applicants were given four months to apply. In April this year, two entities, IDFC and Bandhan, were granted in-principle full licence, of the 25 which had applied; they have to fulfill various conditions within a stipulated period.

Last year, RBI had published a discussion paper on banking structures in India, in which the concept of differentiated bank licences was mooted. It is understood that the central bank will soon issue norms for licensing on payment banks and small banks. While payments banks will offer (only) payment services, small banks are supposed to operate in a particular area and focus on basic services.

There are other places — such as the US, Australia, Singapore, Hong Kong and Indonesia — which grant a differentiated licence.

Separately, Gandhi said the assessment of the monsoon rains on the economy would not be done until later.

The monsoon strengthened at the start of the key planting month after recording the weakest first month of the June-September rainy season in five years, weather officials said earlier this week.

Some economists believe a below-normal monsoon this year might result in an extended pause by the central bank on key policy rates. RBI will review the monetary policy on August 5.

In the June review, it had kept key policy rates unchanged.