RBI Allows Small Finance Banks ‘On-Tap’ Licenses
Updated: Aug 5, 2020
At the end of August 2019, Reserve Bank of India declared the Draft Guidelines for ‘on tap’ licensing of small finance banks. This meant that RBI would accept applications throughout the year at any time, and the licenses will be granted accordingly.
RBI had issued the Guidelines for Licensing of “Small Finance Banks” or “Payment Banks” in the private sector on November 27, 2014. After working with small finance banks for more than four years, it granted “on tap” licensing for these banks. According to them the performance of the small finance banks showed that they have achieved their priority sector targets and thus attained their mandate for furthering financial situation.
In September 2015, RBI granted licenses to 10 small finance banks. Later in August 2016, it granted on tap licenses for universal banks. Later, RBI released the final guidelines for the application of licenses. However, they would need more time to review the performance of Payments banks before considering the licensing of this category of banks to be put “on tap”.