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The final list of applicants for small finance and payments banks, issued by the Reserve Bank of India (RBI) on Wednesday, has some big names from across sectors such as technology, telecom, microfinance and retailing.
Sun Pharmaceutical Industries’ Managing Director Dilip Shanghvi in his personal capacity, Tech Mahindra (group firm Mahindra & Mahindra Finance had earlier withdrawn its application for a universal bank) and Vijay Shekhar Sharma, founder of One97 Communication, holding company for Paytm are among the new names that figure.
Some other big companies such as Reliance Industries, Bharti Airtel, Aditya Birla Nuvo and Videocon Industries have announced their intention to apply for a payments bank licence. The list also has the Department of Post and two entities related to the National Stock Exchange (NSE), having applied for a payments bank in separate applications. One is NSE Strategic Investment Corporation and the second is National Securities Depository Ltd. The former manages the group’s strategic investments.
RBI had 72 applications for small finance banks and 41 for payments banks by the end of Monday, the last day for getting these.
The proposed payments bank can accept individual deposits up to Rs 1 lakh and offer current and savings account deposits. These can also issue debit cards and offer internet banking; they are not to be allowed to lend or issue credit cards.
Some that have applied for a payments bank licence are SKS Microfinance, Cholamandalam Distribution Services, Vakrangee, Citrus Payment Solutions, ItzCash, One MobiKwik Systems and Oxigen.
Small finance banks will be similar to the existing commercial lenders. They are to undertake the basic banking activities of accepting deposits and lending to unserved and under-served sections. However, the maximum loan size and investment limit exposure to single and group clients cannot be more than 10 per cent and 15 per cent of capital funds, respectively. Apart from this, at least half the loan portfolio has to include loans and advances of up to Rs 25 lakh.
Dewan Housing, Capital Local Area Bank, Coastal Local Area Bank, SKS Microfinance, Jagaran Microfin, ESAF Microfinance, & Investments and Lulu Forex have applied for small finance banks. The list also includes several individuals, including former Infosys chief financial officer V Balakrishnan and former Union Bank of India chairman K Cherian Varghese.
These applications are going to be scrutinised by separate External Advisory Committees (EAC). The EAC for payments banks will be headed by Nachiket Mor, a board member of RBI. Other members are Shubhalakshmi Panse, former Allahabad Bank chief; Roopa Kudva, managing director, CRISIL and Deepak Phatak, professor at Indian Institute of Technology, Bombay.
The committee on small banks will be chaired by Usha Thorat, former deputy governor at RBI. Other members are M S Sahoo, secretary, Institute of Company Secretaries of India; M S Sriram, professor at Indian Institute of Management, Bengaluru, and M Balachandran, chairman, National Payments Corporation of India. Both committees will give their recommendations. Several entities in the race for a universal bank licence in the earlier round but weren't successful have applied for a niche banking licence. UAE Exchange and Janalakshmi Financial Services have applied for a small bank licence. Videocon, Aditya Birla Group and the Department of Post have applied for a payments bank.
In the earlier round, RBI had granted an in-principle approval for a universal banking licence to infrastructure financing firm IDFC and microfinance lender Bandan, from 25 applicants.
SOME OF THE NEW NAMES...
Payments banks
- Tech Mahindra
- Department of Post
- NSE Strategic Investment Corporation
- National Securities Depository Ltd
- Kalpataru Corporation
- Lulu Forex Private Ltd
- SKS Microfinance
- Janalakshmi Financial Services
- Ujjivan Financial Services
- Utkarsh Micro Finance Private Ltd
- Dilip Shanghvi, MD, Sun Pharma
- V Balakrishnan (Former CFO, Infosys) and others
- K Cherian Varghese (Former CMD, Union Bank)
- Vijay Shekhar Sharma, (Founder of One97 Communication, holding company for Paytm )
