The Reserve Bank of India(RBI) on Monday constituted a committee headed by former deputy governor Shyamala Gopinath to evaluate applications for universal banks and small finance banks (SFB). The constitution of the committee is in line with the regulator’s guidelines for ‘on-tap licensing.
The RBI will initially screen the applications for universal banks and SFBs to ensure the prima facie eligibility of the applicants. After that, the committee will evaluate the applications, RBI said. A universal bank is a bank that offers retail, wholesale, and investment banking services under one roof.
The Standing External Advisory Committee (SEAC) panel will have five members, including Shyamala Gopinath. Revathy Iyer, director, central board of RBI; B Mahapatra, former executive director, RBI and current chairman of the National Payments Corporation of India (NPCI), will be part of the committee RBI. Similarly, TN Manoharan, former chairman of Canara Bank, and Hemant G Contractor, former managing director (MD) of State Bank of India (SBI), will also be part of the committee.
RBI’s internal working group (IWG) suggested allowing large corporate and industrial houses to own banks by amending the Banking Regulation Act, 1949. However, former RBI governor Raghuram Rajan and former RBI deputy governor Viral Acharya had severely criticized the suggestion by the IWG, calling it a “bombshell”.
RBI had last issued a banking license in 2014 to Kolkata-based Bandhan Bank and IDFC.
Similarly, in 2015 RBI granted an in-principle license for small finance banks to 10 entities, including Ujjivan Financial Services, Janalakshmi Financial Services, and Equitas Holdings. Later, the regulator released separate guidelines for allowing on-tap licensing of universal and small finance banks.