Universal, small finance banks: 8 candidates for on-tap licences

The Reserve Bank of India (RBI) on Thursday unveiled the names of eight candidates for ‘on-tap’ licence of common banks and small finance banks.
According to the RBI, the 4 candidates for common financial institution licence are: UAE Exchange and Financial Services Ltd, Repatriates Cooperative Finance and Development Bank Limited (REPCO Bank), Chaitanya India Fin Credit Pvt Ltd and Pankaj Vaish and others. The 4 candidates small finance banks embody VSoft Technologies Pvt Ltd, Calicut City Service Co-operative Bank Ltd, Akhil Kumar Gupta and Dvara Kshetriya Gramin Financial Services Pvt Ltd.
On March 22, the RBI arrange the SEAC — a five-member committee headed by former RBI Deputy Governor Shyamala Gopinath for evaluating functions for common banks in addition to small finance banks. Other members of the panel embody RBI Central Board Director Revathy Iyer, National Payments Corporation of India Chairman B Mahapatra, former Canara Bank Chairman TN Manoharan and former Chairman of Pension Fund Regulatory and Development Authority Hemant Contractor.

ExplainedGuidelines issued in 2016As per the on-tap licensing of common banks pointers issued in August 2016, resident people and professionals with 10 years of expertise in banking and finance at a senior degree too are eligible to advertise common banks. However, massive industrial homes are excluded as eligible entities however allowed to take a position.

The functions for common banks and small finance banks will likely be initially screened by the Reserve Bank to make sure prima facie eligibility of the candidates. “The Standing External Advisory Committee (SEAC) comprising eminent persons with experience in banking, financial sector and other relevant areas, will evaluate the applications thereafter. The tenure of this SEAC will be for three years,” the RBI stated.

An inside working group of the RBI final yr proposed an overhaul of the licensing coverage for personal banks and prompt permitting massive company and industrial homes to drift banks in India after appropriate amendments to the Banking Regulation Act. Although a number of of the massive company homes in India had utilized for a banking licence up to now, the RBI had rejected these proposals.
However, the RBI has not but authorized or rejected the suggestions of the working group. Former Reserve Bank Governor Raghuram Rajan and ex-Deputy Governor Viral Acharya criticised the proposal to permit company homes to drift banking entities, saying that it’ll result in “connected lending” which, in keeping with them, is “invariably disastrous”.

Reserve Bank units up RRA 2.0
The RBI has determined to arrange a brand new Regulations Review Authority (RRA 2.0) for a interval of 1 yr from the date of its institution to evaluation the regulatory prescriptions internally, in addition to in search of solutions from the RBI regulated entities and different stakeholders on their simplification and ease of implementation.
The RRA 2.0 will deal with streamlining regulatory directions, scale back compliance burden of regulated entities by simplifying procedures and scale back reporting necessities, wherever potential. M Rajeshwar Rao, Deputy Governor, has been appointed because the Regulations Review Authority. The Authority can be arrange for a interval of 1 yr from May 1, except its tenure is prolonged by the RBI.