The new small and payments banks will have the responsibility to extend credit to small borrower who is dependent on money lenders and private financers
The Reserve Bank of India (RBI) on Thursday released its final guidelines for small and payments bank in the country. The intent behind such banks is to include the excluded sections of the society in formal banking channels.
RBI said, these payments banks will further spread financial inclusion by providing small savings accounts and payments and remittance services to migrant labour workforce, low income households, small businesses, other unorganised sector entities and other users.
Small finance banks, on the other hand will provide savings vehicles, and supply of credit to small business units; small and marginal farmers; micro and small industries; and other unorganised sector entities, through high technology-low cost operations, the central bank said.
The new banks, when set-up, will have the responsibility to extend credit to the small borrower who is dependent on the money lenders and other such entities for loan purposes.
Mobile service providers, existing non-banking finance companies and local area banks are seen as potential entities setting up such banks.
Presenting his Budget in July, finance minister Arun Jaitley had mentioned the government allowing the setting up of small and payment banks. He had said, "After making suitable changes to current framework, a structure will be put in place for continuous authorization of universal banks in the private sector in the current financial year. RBI will create a framework for licensing small banks and other differentiated banks. Differentiated banks serving niche interests, local area banks, payment banks are contemplated to meet credit and remittance needs of small businesses, unorganized sector, low income households, farmers and migrant work force”.
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