NEW DELHI: As many as eight institutions and individuals have applied for on-tap licenses to set up universal banks and small finance banks.
UAE Exchange and Financial Services, REPCO Bank and Chaitanya India Fin Credit are among the four applicants who have applied for a universal banking license, while VSoft Technologies, Calicut City Service Co-operative Bank and Dvara Kshetriya Gramin Financial Services have sought small finance bank license. There are two individual applicants, which include Pankaj Vaish and others, who have shown interest in setting up universal banks, and Akhil Kumar Gupta, who have sought on-tap licences for universal banks, the Reserve Bank said on Thursday.
This is not the first time that UAE Exchange is attempting a banking foray. The non-bank financier was the sole applicant who had applied for such a licence in 2016, when the central bank tweaked its policy on universal bank licences to make them available ‘on tap’ instead of during specific periods, reflecting the reluctance of the sector, often referred to as ‘shadow banks’.
These applications will be evaluated by an RBI panel now. The proposals, if accepted, will pave the way for India’s first full-service banks since IDFC First Bank and Bandhan Bank were awarded licences in 2014.
Besides, the banking regulator gave ten small finance bank licences in 2018 which include Janalakshmi Financial Services, Ujjivan Financial Services based in Bengaluru, RGVN (North East) Microfinance based in Guwahati among others.
The RBI guidelines for 'on-tap' licensing of universal banks in the private sector dated August 1, 2016 and Guidelines for 'on tap' Licensing of small finance banks in the private sector dated December 5, 2019, stated that the applications will be initially screened by the RBI to ensure prima facie eligibility of the applicants.
Last month, the central bank also formed a five-member Standing External Advisory Committee (SEAC) headed by former deputy governor Shyamala Gopinath to evaluate applications for universal banks and small finance banks. Other members of the panel include Revathy Iyer, Director, Central Board, RBI; B Mahapatra, former Executive Director, RBI; T N Manoharan, former Chairman, Canara Bank; and Hemant Contractor, former MD, State Bank of India. The tenure of this SEAC will be for three years.