Draft guidelines for on top licensing of small finance banks

Sep 16, 2019 | by Avantis RegTech Legal Research Team


The Reserve Bank of India (RBI) on September 13, 2019, issues draft guidelines for ‘on top’ licensing of small finance banks in the private sector banks. The main objectives of setting up of small finance banks will be for furthering financial inclusion by including provisions of savings vehicles primarily to unserved and underserved sections of the population, and supply of credit to small business units; small and marginal farmers; micro and small industries; and other unorganised sector entities, through high technology-low cost operations.

RBI issues guidelines for registration, licensing and regulations; the scope of activities; capital requirement; promoters’ contribution; foreign shareholding; voting rights and transfer or acquisition of shares; prudential norms; additional conditions for NBFCs/MFIs/LABs converting into a bank; business plan; corporate governance; transition path; procedure for application; procedure for RBI decisions.

RBI invites suggestions and comments on the draft guidelines may be sent by October 12, 2019, to the Chief General Manager, Reserve Bank of India, Department of Banking Regulation, Central Office, 13th floor, Central Office Building, Shahid Bhagat Singh Marg, Mumbai, 400001.

[Press Release: 2019-2020/701]


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