Payment Banks can become SFB after five years under new RBI norms

SFBs will at once be identified as scheduled banks and can open branches immediately

The Reserve Bank of India’s (RBI)'s new draft guidelines for on-tap licensing of small finance banks (SFBs) allows payment banks to convert into SFBs after five years of operations. If the promoter of a payments bank desires to set up an SFB separately, both the banks should come under the non-operative financial holding company (NOFHC) structure.

The guidelines have also clarified that SFBs will be given scheduled bank status immediately upon commencement of operations and will have general permission to open banking outlets from the date of commencement of operations.

RBI said, “There will not be any restriction in the