The central bank also issued draft guidelines for setting up of payment banks, which will cater to marginalised sections of society, including migrant labourers, for collecting deposits and remitting funds.
Such banks can be set up with a minimum capital of Rs 100 crore as against Rs 500 crore required for normal commercial banks, according to the guidelines. “Both payments banks and small banks are ‘niche’ or ‘differentiated’ banks, with the common objective of financial inclusion,”the RBI said while issuing draft guidelines for licensing of payments banks and small banks.
The proposed small banks will provide a whole suite of basic banking products such as deposits and supply of credit, but in a limited area of operation, it said. On the other hand, payments banks will offer a limited range of products such as acceptance of demand deposits and remittances of funds. They will have a widespread network of access points in remote areas, either through their branch network or through Business Correspondents (BCs).
Foreign investments in these new category banks would be as per the FDI policy. The existing non-bank pre-payment instrument issuers, non-banking finance companies (NBFCs), corporate BCs, mobile telephone companies, super-market chains, companies, real sector cooperatives and public sector entities may apply to set up a payments bank.
In case of small banks, resident individuals with 10 years of experience in banking and finance, companies and Societies will be eligible as promoters to set up small banks.NBFCs, micro finance institutions (MFIs), and Local Area Banks (LABs) can also opt for conversion into small banks.
“Preference will be given to professionals from banking or financial sector, NBFCs and MFIs to set up small banks, if they meet the ‘fit and proper’ criteria,” the draft said.