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Small Finance Bank License

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Small Finance Bank License

Small Finance Bank License

Small Finance Banks are registered as public limited companies under the Companies Act of 2013, are granted licences under section 22 of the Banking Regulation Act of 1949, and are principally governed by the RBI Act of 1934 and the Banking Regulation Act of 1949. Small Finance Banks were established with the intention of serving rural and semi-urban areas, including unorganised areas, small companies, etc. They gain income by obtaining deposits from people who have current and savings accounts, make fixed deposits, etc. The RBI must give its approval before any small financing bank may launch a new branch. It should expand 75% of its ANBC to the PSL-designated classified sectors.

Objective of Small Finance Bank License :

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
Required documents Rules and Regulations

1. 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.
2. Additionally,the applicants should furnish the business plan and other requisite information as prescribed.
3. Applications were to be accepted till the close of business as on January 16, 2015.
4. After experience with SFBs, applications would be received on a continuous basis.
5. However, these guidelines are subjected to periodic review and revision by the RBI

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

FAQ

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.

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

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