RBI issues 10 small bank licences

The Reserve Bank of India (RBI) on Wednesday granted 10 entities in-principle licences to open so-called small finance banks—another move towards expanding access to financial services in rural and semi-urban areas. Ujjivan Financial Services Pvt. Ltd, Janalakshmi Financial Services Pvt. Ltd and Equitas Holdings Ltd are among the 10 entities. The others are Au Financiers (India) Ltd, Capital Local Area Bank Ltd, Disha Microfin Pvt. Ltd, ESAF Microfinance and Investments Pvt. Ltd, RGVN (North East) Microfinance Ltd, Suryoday Micro Finance Pvt. Ltd, and Utkarsh Micro Finance Pvt. Ltd. Larger financial services firms such as Dewan Housing Finance Ltd, IIFL Holdings Ltd, SKS Microfinance Ltd and UAE Exchange and Financial Services Ltd did not qualify for the licences. No publicly traded entities have been included in the list. Small finance banks will offer basic banking services, accepting deposits and lending to unserved and underserved sections including small business units, small and marginal farmers, micro and small industries, and entities in the unorganized sector, RBI said when it released guidelines for such banks in November. Eight out of the 10 entities granted the in-principle approval, which is valid for 18 months, are microfinance institutions. The exceptions are Capital Local Area Bank Ltd, which operates in five districts of Punjab, and Au Financiers. Local-area banks are institutions that lend in contiguous districts, mobilizing rural savings and making them available for local investments....

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