The Reserve Bank of India (RBI) issued the ‘Small Finance Bank’ (SFB) licence to Centrum-BharatPe’s ‘Unity Small Finance Bank Ltd (USFBL)’ to carry on an SFB business in India.
- USFBL is a consortium that was established jointly by Centrum Financial Services Ltd (CFSL), a subsidiary of Centrum Capital Limited (CCL), and Resilient Innovations Private Limited (BharatPe).
- They are aspiring to make USFBL as ‘India’s 1st‘ digital SFB.
- With the establishment of USFBL, the number of SFBs in India was increased to 12.
Background:
i.An Expression of Interest (EOI) was floated by Punjab and Maharashtra Co-operative (PMC) Bank for its reconstruction in November 2020.
ii.By analysing the EOI, RBI has accepted the proposal from CFSL along with Resilient Innovation and granted ‘in-principle’ approval to CFSL, to set up an SFB under general ‘Guidelines for ‘on tap’ Licensing of SFBs in the Private Sector’ dated December 5, 2019, to take over crisis-hit PMC Bank as a separate process.
iii.The new bank licence has been issued after a gap of 6 years.
Key Points:
i.Centrum’s MSME (Micro Small and Medium Enterprises) and Microfinance businesses will be merged into USFBL. Centrum Capital will be the promoter of USFBL.
ii.It is the 1st time ever that both CFSL and BharatPe are uniting equally to build a Bank. The SFB, joint venture, will start with a loan book of Rs 1,500 crore and it will infuse Rs 1,800 crore capital into PMC.
Note – Former State Bank of India (SBI) chairman Rajnish Kumar was appointed as the chairman of the BharatPe board.
About Small Finance Bank (SFB):
i.SFBs are the financial institutions that will provide financial services to the unserved and unbanked region of the country.
ii.They will be established as public limited companies in the private sector under the Companies Act, 2013 and governed by the provisions of RBI Act, 1934 and Banking Regulation Act, 1949.
ii.Eligibility: Resident individuals/professionals with 10 years of experience in banking and finance will be eligible as promoters to set up SFBs.
iii.Capital Requirement: The minimum paid-up equity capital for SFB should be Rs 200 crores (US$28 million).
iv.Capital Small Finance Bank followed by Equitas Small Finance Bank were the first two SFBs formed in India.
-RBI Imposed Rs 30 lakh Penalty on Janata Sahakari Bank Ltd
RBI Imposed Monetary Penalty of Rs 30 lakh on Janata Sahakari Bank Ltd, Pune, Maharashtra for non-compliance with certain directions issued by RBI under the Supervisory Action Framework (SAF) and RBI directions on ‘Frauds in Urban Co-operative Banks: Changes in Monitoring and Reporting mechanism’.
Recent Related News:
As per the Reserve Bank of India’s (RBI) publication of ‘Deposits with Scheduled Commercial Banks – March 2021’, Scheduled Commercial Banks (SCBs) deposits in FY21 grew by 11.9 percent year-on-year compared to 8.8 percent in FY20 due to high growth in the Current Account and Savings Account (CASA) deposits.
About Reserve Bank of India (RBI):
Establishment – 1st April 1935
Headquarters – Mumbai, Maharashtra
Governor – Shaktikanta Das
Deputy Governors – Mahesh Kumar Jain, Michael Debabrata Patra, and M Rajeshwar Rao, T. Rabi Sankar
