Dos and don'ts of small finance banks

Quick check of what the small finance banks will and will not be allowed to do

Reserve Bank of India (RBI) has granted in-principle licence for small finance banks to ten entities.

The name of the applicants that have been granted the licence include Au Financiers, Capital Local Area Bank , Disha Microfin, Equitas Holdings, ESAF Microfinance and Investments, Janalakshmi Financial Services, RGVN (North East) Microfinance, Suryoday Micro Finance, Ujjivan Financial Services and Utkarsh Micro Finance.

DETAILED STORY: RBI grants small finance banks licence to 10 entities

Here is what they will and won't be allowed to do:

CAN DO:

• Undertake basic banking activities of acceptance of deposits and lending 

• Can lend only for financial inclusion including small business units, small and marginal farmers, micro and small industries and unorganised sector entities
   
• Allowed to distribute mutual fund products, insurance products and pension products

CAN'T DO: 

 

• Not allowed to set up subsidiaries to undertake non-banking financial activities
   
• Other financial and non-financial services activities of the promoters should not be mingled with the working of the bank