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Janalakshmi obtained a small finance bank licence.

posted Sep 25, 2015, 4:42 AM by Pilar Larios   [ updated Sep 25, 2015, 4:42 AM ]
The Reserve bank of India grants 10 small finance bank licences. Janalakshmi Financial Services, Capital Local Area Bank, Ujjvan Financial Services among the 72 applicants.

The 10 entities to bag the small finance licence are -- Au Financiers (India) from Jaipur, Capital Local Area Bank, Disha Microfin Pvt Ltd from Ahmedabad, Equitas Holdings, ESAF Microfinance and Investments from Chennai, Janalakshmi Financial Services, Ujjivan Financial Services based in Bengaluru, RGVN (North East) Microfinance based in Guwahati, Suryoday Micro Finance from Navi Mumbai and Utkarsh Micro Finance based out of Varanasi, the RBI list on the website said.

Big names such as DHFL, IIFL Holdings, SKS Microfinance and UAE Exchange & Financial Services among others failed to make the cut.

No individuals were granted to set up a small finance bank. Among individuals, Manish Khera, CEO of payments bank licence winner Airtel Money, V Balakrishnan had applied for the small finance bank licence.

In February, the banking regulator had received 72 applications for small finance banks and 41 applications for payments banks. Last month, the RBI gave 11 licences to set up payments bank.

Basic services

The small finance banks can provide basic banking services like accepting deposits and lending to the unbanked sections such as small farmers, micro business enterprises, micro and small industries and unorganised sector entities.

There will also be limits on the loan size and the quantum of deposits that such banks can accept.

Similar to payment banks, “The “in-principle” approval granted will be valid for 18 months to enable the applicants to comply with the requirements under the Guidelines and fulfil other conditions as may be stipulated by the RBI,” the central bank statement said.

On being satisfied that the applicants have complied with the requisite conditions laid down by it as part of “in-principle” approval, the RBI would consider granting them a licence for commencement of banking business, RBI said.

Selection criteria

A detailed scrutiny of the applicants was done which involved assessment of financial soundness, proposed business plan, fit and proper status based on due diligence reports received from the regulators, investigative agencies, banks, etc.

"An important factor was proposed reach into unbanked areas and underserved sections of the population. The EAC held detailed discussions in multiple sittings on the applications based on the information which was submitted to the RBI,” the central bank said.

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