Lok Sabha Question No. 2658 (UNSTARRED), answered on 2017-03-17
Subject: Small Finance and Payment Banks
Ministry: FINANCE
Asked by: M. K. RAGHAVAN, SUNIL KUMAR MONDAL, RAJESHBHAI NARANBHAI CHUDASAMA, JAYSHREEBEN  PATEL, S.P. MUDDAHANUMEGOWDA

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA UNSTARRED QUESTION NO.2658

TO BE ANSWERED ON THE 17 th  March 2017/ Phalguna 26, 1938 (SAKA)

Small Finance and Payment Banks

## QUESTION

2658.  SHRI M.K. RAGHAVAN: SHRI RAJESHBHAI CHUDASAMA: SHRI S.P. MUDDAHANUME GOWDA:

SHRI SUNIL KUMAR MONDAL: SHRIMATI JAYSHREEBEN PATEL:

Will the Minister of FINANCE be pleased to state:

- (a) whether the  Government has  granted  in  principle  approval  for  setting  up  of  Small  Finance Banks and Payment Banks  in the recent past and  if  so,  the  details  thereof  along  with  the  time  by which the said banks are likely to be opened by successful entities;
- (b) whether Reserve Bank of India / Government has prescribed any guidelines in this regard and if so, the details thereof; along with the manner in which the guidelines are likely to be enforced; and
- (c) whether  the  Government  has  announced  payment  system  innovation  awards  to  encourage innovators in the areas of payment and settlement and if so, the details thereof?

## ANSWER

## The Minister of State in the Ministry of Finance (SHRI SANTOSH KUMAR GANGWAR)

(a)  to  (c):    Reserve  Bank  of  India  (RBI)  issued  guidelines  for  licensing  of  small  finance  banks  and payments banks on November 27, 2014 and granted in-principle approvals to 10 applicants to set up small finance banks and to 11 applicants to set up payments banks.

The guidelines for small finance banks provide inter-alia that (i) eligible promoters could be resident individuals/professionals  with  10  years  of  banking  and  finance experience  including companies controlled by them etc. (ii) shall primarily undertake basic banking activities of acceptance of  deposits  and  lending  to  unserved  and  underserved  sections  (iii)  The  minimum  paid-up  equity capital for small finance banks shall be Rs. 100 crore and (iv) all prudential norms and regulations of RBI  as  applicable  to  existing  commercial  banks  including  requirement  of  maintenance  of  Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).

The guidelines  for  payment  banks  provide  inter-alia  that  (i)  eligible  promoters  can  be  nonbank Pre-paid Payment Instrument (PPI) issuers; and other entities like mobile telephone companies etc. (ii) shall primarily accept demand deposits upto maximum balance of Rs. 1,00,000 per individual customer. (iii) Issue ATM/debit cards, payments and remittance services. (iv) maintain CRR with the Reserve Bank on its outside demand and time liabilities and invest at least 75 per cent of its 'demand deposit balances' in SLR eligible Government securities/treasury bills.

Licensed  under  Section  22  (1)  of  the  Banking  Regulation  Act,  1949,    Small  Finance  and Payment banks have to comply with all regulatory and supervisory frameworks that are applicable to commercial banks with suitable calibrations in view of the differentiated scope of such banks.

*******