Manappuram Finance, Muthoot Finance jump on RBI's draft guidelines

Manappuram Finance and Muthoot Finance rose by 3.30% to 4.76% at 13:19 IST on BSE after the central bank announced draft guidelines for setting up of payments banks and small banks.

Muthoot Finance (up 4.76%) and Manappuram Finance (up 3.30%), edged higher.

The S&P BSE Sensex was up 29.49 points, or 0.12% at 25,590.65.

Muthoot Finance had underperformed the market over the past one month till 17 July 2014, falling 5.85% compared with 0.16% rise in the Sensex. The scrip had also underperformed the market in past one quarter, falling 1.01% as against Sensex's 12.96% rise.

Manappuram Finance had underperformed the market over the past one month till 17 July 2014, falling 6% compared with 0.16% rise in the Sensex. The scrip had also underperformed the market in past one quarter, falling 0.44% as against Sensex's 12.96% rise.

The Reserve Bank of India (RBI) on Thursday, 17 July 2014, announced draft guidelines for setting up of payments banks and small banks.

A payments bank will only be allowed to accept deposits and transfer money from one account to another (undertake remittances) but will not be allowed to undertake lending activities.

Given that their primary role is to provide payments and remittance services and demand deposit products to small businesses and low-income households, payments banks will initially be restricted to holding a maximum balance of Rs 1 lakh per customer, the RBI said.

Both the payments bank and the small bank promoters will have to keep their other financial and non-financial services separate. A payments bank and a small bank can be set up with an initial capital of at least Rs 100 crore, each.

It said existing pre-paid instruments providers, non-banking finance companies, corporate Business Correspondents, mobile telephone companies, super-market chains, companies, real sector cooperatives and public sector entities can apply for a payments bank licence.

Resident individuals/professionals with 10 years of experience in banking and finance, companies and societies will be eligible to set up small banks.

In addition, existing non-bank financial companies (NBFCs), Micro Finance Institutions (MFIs), and Local Area Banks can also opt for conversion to small banks, the RBI said.

Powered by Capital Market - Live News