Indian The Reserve Bank of India (RBI) on Friday invited applications from small finance banks meeting specified criteria, including having a minimum net worth of Rs 1,000 crore, to become regular banks. In November 2014, the Reserve Bank had issued guidelines related to licensing of Small Finance Banks (SFBs) in the private sector. At present there are about a dozen SFBs including AU Small Finance Bank, Equitas Small Finance Bank and Ujjivan Small Finance Bank.
These are the conditions
The central bank said SFBs aiming to become regular banks should have a minimum net worth of Rs 1,000 crore at the end of the previous quarter. Apart from this, the shares of that bank should be listed in a recognized stock exchange. The SFB should also have a net profit in the last two financial years and its GNPA (Gross NPA) and NNPA (Net NPA) in the last two financial years should be less than or equal to three percent and one percent respectively.
This process was decided in the year 2019
In terms of shareholding, RBI said “There is no compulsion for an eligible SFB to have an identified promoter. However, the existing promoters of the eligible SFB, if any, will continue as promoters upon conversion into a regular bank”. Further, addition of new promoters or change in the same will not be permitted for eligible SFBs during the transition period. In December 2019, RBI had prescribed the procedure related to conversion of SFBs into regular banks.
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