The RBI will first screen applications for universal banks and SFBs to ensure that the applicants are prima facie qualified. The committee would then assess the applications, according to RBI. A universal bank is a financial institution that provides retail, wholesale, and investment banking services all in one location.
The Reserve Bank of India (RBI) set up a committee led by former deputy governor Shyamala Gopinath on Monday to assess applications for universal banks and small finance banks (SFB). The committee was established in accordance with the regulator’s guidelines for “on-tap” licencing.
The RBI will first screen applications for universal banks and SFBs to ensure that the applicants are prima facie qualified. The committee would then assess the applications, according to RBI. A universal bank is a financial institution that provides retail, wholesale, and investment banking services all in one location.
The Standing External Advisory Committee (SEAC), which will include Shyamala Gopinath, will have five members. According to RBI, the committee will include Revathy Iyer, director of the central board of the RBI, and B Mahapatra, former executive director of the RBI and new chairman of the National Payments Corporation of India (NPCI). The committee will also include TN Manoharan, former chairman of Canara Bank, and Hemant G Contractor, former managing director (MD) of State Bank of India (SBI).
The RBI’s internal working group (IWG) had previously proposed amending the Banking Regulation Act of 1949 to enable large corporate and industrial houses to own banks. Former RBI governor Raghuram Rajan and former RBI deputy governor Viral Acharya, on the other hand, have slammed the IWG’s plan, calling it a “bombshell.”
The last banking licences were given by the RBI in 2014 to Kolkata-based Bandhan Bank and IDFC.
In 2015, the RBI issued ten companies, including Ujjivan Financial Services, Janalakshmi Financial Services, and Equitas Holdings, in-principle licences for small finance banks. Later, the regulator issued separate guidelines enabling universal banks and small finance banks to be authorized on tap.
