The Reserve Bank of India (RBI) has turned down two additional applications, including one from Dvara Kshetriya Gramin Financial Services, for the establishment of small finance banks. This decision follows the rejection of three applications in July 2023.
The RBI had received approximately a dozen applications under the guidelines for 'on-tap' Licensing of Universal Banks and Small Finance Banks (SFBs). These guidelines were issued on 1 August 2016 and 5 December 2019, respectively.
In a recent statement, the RBI disclosed that the examination of two more applications for setting up a small finance bank has been completed in accordance with the established procedure. Upon assessment, Dvara Kshetriya Gramin Financial Services and Tally Solutions were found unsuitable for in-principle approval to establish a small finance bank. However, two remaining applications are still being reviewed.
Earlier decisions regarding six applications were announced in May 2022, while applications from Akhil Kumar Gupta, Cosmea Financial Holdings and West End Housing Finance were rejected in July of the same year.
According to the guidelines, the initial minimum paid-up voting equity capital for a universal bank should be Rs 500 crore, with a minimum net worth of Rs 500 crore maintained at all times. For SFBs, the minimum paid-up voting capital/net worth requirement is Rs 200 crore. Additionally, urban co-operative banks seeking to transition into SFBs are required to have an initial net worth of Rs 100 crore, which must be increased to Rs 200 crore within five years.