RBI to issue guidelines for small finance banks soon

The RBI would issue guidelines for small finance banks in a few weeks as it pushed for financial inclusion backed by technology.
"In the next few weeks, we will put out guidelines inviting applications for what we call small finance banks. These are banks that will cater to smaller customers across the country. The detailed guidelines will also be put out," RBI Governor Raghuram Rajan said today.
He was speaking at the 10th IDRBT Banking Technology Excellence Awards here.
Referring to payment banks, he said they should tie-up with regular commercial banks to offer different services. "My hope is that by licencing payment banks, we would also further cause of bank payments, bank alliances."

Highlighting that technology has an important role to play in financial inclusion, he said certain 'Ps', including Products, Price and Protection summarise the aspects which need to be pondered over by bankers.
In this context, he said Products that are shaped to the needs of individuals, without taxing their understanding are needed.

The RBI has put out a consumer code which puts the onus on banks to determine what is suitable for individuals, Rajan said.
"Of course, that's a harder task than just selling the product to the individual. We have to find out what the individual understands, what the needs are, etc."

Technology may help in understanding customer profiles better and to inform the customer better, the Governor said.