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RBI to Allow ‘On-Tap’ Licenses For Small Finance Banks

Reserve Bank of India, while setting various development and regulatory policy measures, has notified that it will issue the Draft Guidelines for ‘on tap’ licensing of small finance banks by the end of August 2019.

On tap licensing means that RBI will be accepting the applications at any point of time, throughout the year, and the licenses will be granted accordingly.

RBI said it had issued the Guidelines for Licensing of “Small Finance Banks” or “Payment Banks” in the private sector on November 27, 2014, mentioning that after gaining experience in dealing with these small finance banks, the bank will consider “on tap” licensing to these banks. The bank further added that review of the performance of the small finance banks reveals that they have achieved their priority sector targets and thus attained their mandate for furthering financial situation.

In September 2015, RBI granted licenses to 10 small finance banks. Then in August 2016, it paved the way for universal bank licenses to be available on tap. Later, RBI released the final guidelines mentioning the eligible entries that can apply for licenses. NBFCs, qualified individuals and a few private companies became eligible under these guidelines and can apply for a license.

The bank, however, has mentioned that it would need more time to review the performance of Payments banks before considering the licensing of this category of banks to be put “on tap”.

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