CURRENT AFFAIRS : BANKING & FINANCE
Reserve Bank of India Issues Guidelines for Voluntary Conversion of Small Finance Banks into Universal Banks
- The Reserve Bank of India (RBI) has issued guidelines for the voluntary transition of Small Finance Banks (SFBs) to Universal Banks effective immediately.
- The “Guidelines for ‘on-tap’ Licensing of SFBs in Private Sector”, dated December 5, 2019, provide a transition path for SFBs to become universal banks.
Key Highlights :
- Minimum Requirements for Transition : The RBI has stated that SFBs should have a minimum net worth of Rs 1,000 crore to become universal banks in accordance with the on-tap licensing norms.
- According to the RBI, SFBs aspiring to become a universal bank need to have scheduled status with a satisfactory track record of performance for a minimum period of 5 years.
- Stock Exchange Listing Requirement : An SFB intending to transition to a universal bank must be listed on a recognized stock exchange.
- Out of the 10 SFBs, only North East Small Finance Bank is not listed.
- Financial Performance and Asset Quality:SFBs must have reported net profit in the last two financial years.
