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Small Finance Bank License

Assistance for obtaining Small Finance Bank License from RBI
All regulatory and business enquiries are resolved on priority basis
Compliance Management and business plans for new small finance banks
All procedural requirements to get small finance bank registration
Guidance on regulatory norms for new Small Finance Bank
Explanation on Small finance bank license requirement for new business

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    Under Companies Act 2013,Small Finance Banks are registered as public limited company and are licensed under section 22 of the Banking Regulation,1949 and primarily governed by Banking Regulation Act,1949 and RBI Act,1934. Small Finance Banks were introduced with the purpose to serve rural and semi-urban areas like small businesses, unorganized areas, etc. They make money by collecting it from current and saving account depositors, fixed depositors, etc. Every small finance banks needs approval from RBI before opening of any new branch. It should extend 75% of its ANBC to the classified sectors under PSL by the RBI.

    Objectives

    Provide framework to promote rural and semi-urban savings
    Provide credit in local areas to carry out economic activities
    Provide saving vehicles to the underprivileged sections of the society
    By using hi-tech, low-cost technology, supply of credit to small businesses

    Eligibility Criteria for Banks

    Min. Paid Up Capital Rs. 100 Crores
    Promoters min. Initial contribution to above 40%(to be bought to 26% within 12 years of commencement)
    Foreign Shareholding as per FDI policy for private banks
    Subjected to all prudential norms and regulations of commercial banks
    Extend 75% of ANBC to the sectors classified as PSL
    At least 50% of its loan portfolio should constitute of loan and advances upto 25 lakhs
    Document Required

    Document Requirement For SFBs

    As per Rule 11 of the Banking Regulation (Companies) Rules, 1949, applications had to be submitted in the prescribed form (Form III) to — The Chief General Manager — Department of Banking Regulation — Reserve Bank of India, 13th Floor, Central Office Building, Mumbai – 400 001.
    Additionally,the applicants should furnish the business plan and other requisite information as prescribed.
    Applications were to be accepted till the close of business as on January 16, 2015.
    After experience with SFBs, applications would be received on a continuous basis.
    However, these guidelines are subjected to periodic review and revision by the RBI

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      Rules and Regulations

      Undertake basic banking services to underprivileged section of the society
      Provide banking facilities to boost savings
      Target small business units through hi-tech, low-cost operations
      Established as public limited company promoted by either individuals, corporate, trust/societies.
      Governed by RBI Act 1934, Banking Regulation Act 1949, etc.
      Considered as non-scheduled banks.

      Key Challenges Faced

      Difficulty to maintain ideal technology platform
      Naive to handle deposits
      Huge amount required to invest in infrastructure
      Reduced earning initially to maintain ratios like CRR,SLR etc

       

      Alternately Call our Legal Expert Now For Free Consultation at 09599653306

      Frequently Asked Questions on Small Finance Bank License

      No, a promoter of large business/industrial house cannot be promoter of small banks

      SFBs are subjected to all the stated regulations by the RBI as well as those exist for commercial banks.

      No, there is no cap on the number of branches that can receive license to be SFBs.

      Compare your Options
      Particulars Payment Banks Small Finance Banks
      Objective To provide small saving accounts and payment/ remittance services to migrant labour force and low income households To provide financial inclusion and supply of credit to small business units and farmers through high technology and low cost operations.
      Type of deposits Only current and saving accounts All types of accounts
      Promoters Contribution Initially 40% which is to be lowered to 26% in 12 years Should retain 40% in first five years.
      Target Audience Poor People MSME’s, Businessmen
      Provide Loans No Yes
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