RBI may issue final norms on small, payments banks in 2-3 months

The Reserve Bank is likely to issue final guidelines on small and payments banks within 2-3 months, paving the way for corporates to enter these two segments.

The final guidelines on small and payments banks are expected in the next 2-3 months, sources said.

Draft guidelines for small and payments banks were issued by the RBI in July and comments were invited till August 28.

It is examining the suggestions received and is in the process of finalising the norms for such banks, sources said.

The final norms will allow micro finance institutions, telecom players, non-banking finance companies (NBFCs) and public sector companies eligible to apply for bank licences once RBI invites applications for the same.

The proposed small banks will provide a whole suite of basic banking products such as deposits and supply of credit, but in a limited area of operation.

On the other hand, payments banks will offer a limited range of products such as acceptance of demand deposits and remittances of funds. They will have a widespread network of access points particularly in remote areas, either through their own branch network or through Business Correspondents (BCs) or through networks provided by others.

"Both payments banks and small banks are 'niche' or 'differentiated' banks, with the common objective of furthering financial inclusion," the RBI had said while issuing the draft guidelines for licensing these banks.

Small banks can collect deposits and disburse small-ticket loans to farmers and small and medium businesses, unorganised sector through high technology-low cost operations, as par draft norms.

Payment banks will cater to marginalised sections of society, including migrant labourers, for collecting deposits and remitting funds. They would, however, not be allowed to indulge in lending operation.

Such banks can be set up with a minimum capital of Rs 100 crore as against Rs 500 crore required for normal commercial banks, as per the draft norms.