The Reserve Bank of India rejected two more applications, including that of Dvara Kshetriya Gramin Financial Services, for setting up small finance banks. Earlier in July 2023, it rejected three applications.
RBI has received around a dozen applications to set up banks under the guidelines for ‘on-tap’ Licensing of Universal Banks and Small Finance Banks (SFBs).
The guidelines for “on-tap” licensing of Universal Banks and SFBs in the private sector were issued on August 1, 2016, and December 5, 2019, respectively.
In a statement on Friday, the RBI said that the examination of two more applications for setting up a small finance bank has been completed as per the procedure laid down under existing guidelines.
Based on the assessment of the applications, the central bank said it did not find candidates — Dvara Kshetriya Gramin Financial Services Private Limited and Tally Solutions Private Limited — suitable for granting in-principle approval to set up a small finance bank.
However, two remaining applications are still “under examination”.
In May 2022, it announced the decisions on six applications.
In July last year, the RBI rejected applications by Akhil Kumar Gupta, Cosmea Financial Holdings Pvt Ltd and West End Housing Finance Ltd.
As per the guidelines, the initial minimum paid up voting capital for a universal bank should be Rs 500 crore. Next, the bank should have a minimum net worth of Rs 500 crore at all times.
The minimum paid up voting capital/net worth for SFBs should be Rs 200 crore.
In case of urban cooperative banks wishing to convert into SFBs voluntarily, the initial net worth requirement is Rs 100 crore, which will have to be increased to Rs 200 crore within five years.