New RBI guidelines likely to help MFIs become small finance banks

The fact that SFBs open paths to universal banks is assuring to some market players

To give a fillip to its financial inclusion programme, the Reserve Bank of India (RBI) has issued final guidelines on on-tap bank licensing after consulting various stakeholders. 

These norms may form the basis for small finance companies and micro-finance institutions (MFIs) to transform into small finance banks (SFBs), bankers and analysts said. 

“This move will accelerate financial services penetration in the country. The move to enable urban co-operative banks (UCBs), desirous of voluntary transformation into small finance banks (SFBs), would lend greater stability to these banks and protect depositors,” said Rajeev Yadav, managing director and chief executive officer, Fincare Small Finance Bank.

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