Small-bank rules accommodative,to attract applicants: Analysts

Analysts have welcomed the RBI's final guidelines for setting up small finance banks (SFBs) and payments banks (PBs), saying it will generate good interest in the industry as the norms are accommodative.
"The guidelines are largely positive and it is a welcome change from the draft guidelines which were a bit constrictive. The final guidelines are accommodative," consultancy firm PricewaterhouseCoopers's (PwC) leader for banking and capital markets, Shinjini Kumar, told PTI.
She pointed to the changes like PBs being allowed to do cross-border remittances, doing away with geographical limitations and clarity in the shareholding patterns as welcome measures.
Industry expert Ashvin Parekh, who runs an advisory firm, said, "The SFBs are an experiment around the community banking in the US and may need time to stabilise. We also need to wait and watch regarding the efficacy because of the not so successful experience with the local area banks."

He also expressed concerns over the viability of PBs as well as they will have to depend on fees alone for their revenues.
Adaption of technology is crucial as reduced cost of transactions is the only way both SFBs and PBs can be viable, advisory firm Grant Thornton's director Aman Bhargava said.
"The basic objective is to extend range of financial services to the hitherto unbanked which were forced to rely on non-regulated means," he added.
India Ratings' Senior Director Ananda Bhoumik said NBFCs will be keen to enter the SFB business, getting attracted by the liabilities side, while different players like telecom companies and business correspondents will be keen to enter PBs.