RBI open on Tap Licensing for SFB Bank

Category : Business and economics Published on: April 29 2024

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RBI permits Small Finance Banks (SFBs) to seek Universal Bank licenses under on-tap licensing norms, expanding their banking capabilities.
Criteria for SFBs to transition into Universal Banks include a minimum five-year satisfactory performance track record, listing shares on recognized stock exchanges, and meeting financial benchmarks.
SFBs must maintain a minimum net worth of Rs 1,000 crore, adhere to prescribed Capital to Risk-Weighted Ratio (CRAR), and demonstrate net profits in the last two financial years.
RBI mandates SFBs to maintain low non-performing asset (NPA) levels, with gross NPAs not exceeding 3% and net NPAs not surpassing 1% in the last two financial years.
RBI's adoption of the on-tap licensing framework allows eligible entities to apply for banking licenses throughout the year, fostering a more competitive and dynamic banking landscape.