RBI calls for applications from small finance banks to upgrade to regular banks
The Reserve Bank of India (RBI) has announced an invitation for applications from small finance banks (SFBs) meeting specific criteria, including a minimum net worth of Rs 1,000 crore, to apply for the status of regular or universal banks.
The RBI had issued guidelines for licensing SFBs in the private sector in November 2014. Currently, there are approximately a dozen SFBs, such as Au Small Finance Bank, Equitas Small Finance Bank, and Ujjivan Small Finance Bank.
According to the RBI, an SFB aiming to become a universal bank should have a minimum net worth of Rs 1,000 crore as at the end of the previous quarter (audited) and its shares should have been listed on a recognized stock exchange.
The bank should also have recorded a net profit in the last two financial years and have Gross Non-Performing Assets (GNPA) and Net Non-Performing Assets (NNPA) of less than or equal to 3 percent and 1 percent, respectively, in the same period.
Additionally, the bank should meet prescribed Capital-to-Risk Weighted Assets Ratio (CRAR) requirements and demonstrate a satisfactory track record of performance for a minimum period of five years.
Regarding the shareholding pattern, the RBI stated that while there is no mandatory requirement for an eligible SFB to have an identified promoter, the existing promoters of the eligible SFB, if any, shall continue as the promoters upon transitioning to a universal bank.
