RBI ready to issue new licences for small payments banks

Reserve Bank of India (RBI) Deputy Governor R Gandhi on Friday advised the regional rural banks (RRBs) and co-operative banks to pull up their socks as they are set to face more competition in the future with a fresh round of banking licences being issued to small payments banks.

They could be fighting for the same set of customers, he added.

RBI has received 113 applications for the niche banks, including 72 applications for small finance banks and 41 for payments banks. An RBI panel had recommended that a special category of banks, called payments banks be set up to widen the spread of payment services and deposit products to small businesses and low-income households

Meanwhile, they could also be involved in the attempt for financial inclusion. With direct cash transfer too slowly taking off in India, the RRBs and co-operative banks have been asked to prepare for competition that's likely to emerge. Hence, he advised them to get tech-savvy.

Gandhi was speaking at the silver jubilee celebrations of the National Institute of Rural Banking, Bengaluru which is a training and manage development institution for the rural banking sector and offers training programmes for personnel or rural financing institutions in general and particularly to cooperative credit institutions and RRBs.

Gandhi also said that the RBI is introducing norms for the RRBs and cooperative banks that are in line with the norms for banks.

Meanwhile, R Amalorpavanathan, deputy managing director, Nabard, advising the co-operative banks and RRBs on surviving and thriving in today’s world, said they have to think deeper about the norms brought in by the Nabard and RBI as it is aimed at ensuring their health. “This decade is about rural banking,” he said. During the decade 2010-2010, we would see as much banking development as had been seen in the previous 60 years.”

He said as there's a greater requirement for conceptual-oriented training, more of technology will be tapped to impart the training. The central programmes like the Pradhan Mantri Jan Dhan Yojana (PMJDY) and such others will turn out to be game-changers as they envisage using Internet for transferring funds. There are plans to use the Internet to impart training for staff of the RRBs and co-operatives as the training material would be available online. But, he said that the challenge for this now was of providing the material in multiple Indian languages.