GOVERNMENT OF INDIA
Ministry of Finance
DEPARTMENT OF FINANCIAL SERVICES
UNSTARRED QUESTION NO. 503
ANSWERED ON TUESDAY, APRIL 28, 2015 / VAISAKHA 8, 1937 (SAKA)
Licenses for Small Finance Banks and Payment Banks
503. SHRI RAJEEV CHANDRASEKHAR:
Will the Minister of FINANCE be pleased to state;
(a) the steps being taken by the Reserve Bank of India (RBI) to ensure that privatecompanies which are rushing to get licenses for small finance banks andpayment banks have had no past history of Income Tax violation or allegationsof money laundering; and
(b) the details of criteria set by the RBI for companies that are trying to apply forthese licenses?
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI JAYANT SINHA)
(a) and (b): In terms of the Reserve Bank of India (RBI) guidelines issued forLicensing of Small Finance Banks and Payments Banks on November 27, 2014, Promoters/Promoter Groups as defined in the Securities and Exchange Board ofIndia (SEBI) (Issue of Capital and Disclosure Requirements) Regulations, 2009should be 'fit and proper' in order to be eligible to promote small finance banks. RBIwould assess the 'fit and proper' status of the applicants on the basis of their pastrecord of sound credentials and integrity; financial soundness and successful trackrecord of professional experience or of running their business, etc. for at least aperiod of five years. RBI will assess the 'fit and proper' criteria of the applicants whichincludes due diligence of promoters and group entities. As part of the due diligenceprocess to assess the track record of the applicants, confidential information will besought from various investigative and regulatory agencies.
The other criteria as per the guidelines for the small finance and payments banks aregiven below:
Small Finance Banks:
The Payments Bank would be permitted to undertake only certain restricted activitiespermitted to banks under the Banking Regulation Act, 1949, viz. Acceptance ofdemand deposits, i.e., current deposits, and savings bank deposits, (initially restrictedto holding a maximum balance of Rs.100,000 per customer), issuance of ATM and debit cards, Payments and remittance services through various channels (includingbranches, BCs and mobile banking), Issuance of PPIs, Internet banking (transactingprimarily using the Internet) and Functioning as Business Correspondent (BC) ofother banks.