The Reserve Bank of India (RBI) began 2015 by granting a 17-day extension, from 16 January to 2 February, for the country’s smaller banks to apply for licences that will allow them to extend the range of products and services offered.
According to a World Bank estimate, only 35% of Indians have accounts with financial institutions (FIs). India’s central bank is attempting to extend financial inclusion to the rest of the population and has created the two new banking categories of small finance banks and payment banks.
Small finance banks will be similar to existing commercial banks but will offer only basic products such as deposits and loans. Payment banks are meant for simple banking transactions and these institutions will not be authorised to lend or accept term deposits.
The RBI also clarified the guidelines for these niche banks, which it originally issued in November. It subsequently received 176 queries on the small finance bank guidelines and 144 for payments banks. The bank has yet to give a timeline for the issue of licences, which it said will depend on the number of applications received and the time taken to complete the approval process.
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