Suitors line up for small finance and payment banks

With RBI issuing final licensing norms for small finance and payment banks, a host of potential suitors including Shriram Capital and Muthoot Finance today evinced initial interest in setting up such niche entities.
However, they will take a final call on applying to RBI for such licences after going through the fine prints of the guidelines, which were released this evening.
Those having expressed their interest in seeking payment bank license included payment solutions providers Itzcash and Oxigen, business correspondent company Fino, while Muthoot Finance and Shriram Capital may apply for small finance banking licence.
"We will definitely apply for payment banks licence. It is a good beginning. There have been very positive changes in the guidelines but in some we need more clarity," Oxigen Indian Private Limited Founder and Managing Director Pramod Saxena told PTI.

Itzcash Card's Managing director Naveen Surya said, "We are keen on applying for Payment Bank. We could deliver more products and this will also help in improving our portfolio."
Fino's COO and ED Rishi Gupta said the business correspondent company is keen to enter the payment bank fray and is encouraged by the clarity in the final guidelines on factors such as listing and selling of third party products.

NBFC lender Shriram Capital is much more keen on the Small Finance Bank and will be studying the fine print before making an application, its group director G S Sundararajan said.

Gold loans provider Muthoot Finance's director Thomas George Muthoot said the company is interested in applying for small finance banks and will be studying the guidelines.
"The SFB is an experiment around the community banking in US and may need time to stabilise," said Ashvin Parekh, who runs an advisory firm, said. He, however, added that one needs to wait and watch regarding the efficacy because of the not so successful experience with the LAB (Local Area Banks).
Parekh expressed concerns over the viability of the Payment Banks which have to depend on fees alone for their revenues, but said companies like those in telecom may be interested.

Ushering in a new era of differentiated banks, the Reserve Bank today issued final guidelines for licensing of Small Finance Banks (SFB) to serve the marginalised, and Payments Banks (PB) to garner savings and help in remitttances.
The minimum capital requirement for both the sets of banks, introduced to deepen financial inclusion, has been kept at Rs 100 crore and the RBI has allowed a diverse set of promoters to enter the fray.
The SFB will be miniature versions of the currently operational universal banks and will be undertaking all the activities like accepting deposits and lending, but with a focus on the under served people.

The PBs will not be able to lend and have been structured to primarily tap the savings of people and help in the remittances.