MUMBAI: RBI has outlined the eligibility standards for small finance banks (SFBs) to turn into a universal financial institution. This transition will allow them to present loans to bigger companies and provide the complete vary of economic providers and banking merchandise.
To apply for conversion to a universal financial institution, the SFB will need to have been working satisfactorily for not less than 5 years, have its shares listed on a recognised inventory trade, preserve a minimal internet value of Rs 1,000 crore (as audited), meet capital adequacy requirements, and exhibit constant profitability with low ranges of unhealthy loans over the previous two years.
SFBs got here into existence after RBI determined to difficulty differentiated licences to banks that give small loans and for fee banks. Most of those banks are erstwhile NBFCs or microfinance corporations which have chosen to apply for financial institution licences. There are at the moment 12 SFBs. While there is no such thing as a obligatory requirement for a selected promoter, the possession construction already accepted by RBI ought to stay unchanged.
To apply for conversion to a universal financial institution, the SFB will need to have been working satisfactorily for not less than 5 years, have its shares listed on a recognised inventory trade, preserve a minimal internet value of Rs 1,000 crore (as audited), meet capital adequacy requirements, and exhibit constant profitability with low ranges of unhealthy loans over the previous two years.
SFBs got here into existence after RBI determined to difficulty differentiated licences to banks that give small loans and for fee banks. Most of those banks are erstwhile NBFCs or microfinance corporations which have chosen to apply for financial institution licences. There are at the moment 12 SFBs. While there is no such thing as a obligatory requirement for a selected promoter, the possession construction already accepted by RBI ought to stay unchanged.
