RBI rejects 3 'not suitable' applications for setting small finance banks

The Reserve Bank of India has rejected three applications, including the of West End Housing Finance, for setting up small finance banks.

These applications were found not suitable for granting of in-principle approval to set up small finance banks, it said in a statement on Tuesday.

RBI had received about a dozen applications to set up banks under the guidelines for 'on tap' Licensing of Universal Banks and Small Finance Banks (SFBs).

In May last year, it announced the decisions on six applications.

According to RBI, the examination of three more applications for setting up a small finance banks have been completed as per the procedure laid down under extant guidelines.

Based on the assessment of the applications, the applicants "not found suitable" for granting of in-principle approval to set up a small finance bank are Akhil Kumar Gupta, Cosmea Financial Holdings Pvt Ltd and West End Housing Finance Ltd, it said.

The central bank also said that the remaining applications are under examination.

The guidelines for 'on tap' licensing of Universal Banks and SFBs in the private sector were issued on August 1, 2016, and December 5, 2019, respectively.

As per the guidelines, the initial minimum paid-up voting equity capital for a universal bank should be Rs 500 crore. Thereafter, the bank should have a minimum net worth of Rs 500 crore at all times. The minimum paid-up voting capital/net worth for SFBs should be Rs 200 crore.

In case of urban co-operative banks desirous of voluntarily transiting into SFBs, the initial requirement of net worth is Rs 100 crore, which will have to be increased to Rs 200 crore within five years.