Eligible small finance banks will have to provide a detailed rationale for the transition
The Reserve Bank of India (RBI) on Friday released a set of criteria that small lenders need to achieve, including performance metrics and market listing, to become a universal bank and provide comprehensive services to both retail and corporate clients.
The criteria include a five-year track record of satisfactory performance, a net worth of 10 billion rupees, meeting capital requirements, recent profitability and limited non-performing assets, the Reserve Bank of India (RBI) said.
Existing promoters can continue without new additions and approved shareholding plans will remain unchanged, while diversified loan portfolios are favoured, the central bank said.
Small finance banks face limitations in terms of their customer base and are restricted from granting large loans. Additionally, they are unable to establish subsidiaries.
Eligible small finance banks will have to provide a detailed rationale for the transition, with their application assessed according to specified guidelines, including those for on-tap licencing and shareholding directions.
Upon transition, the banks will adhere to all relevant norms, including the structure of a non-operative financial holding company, the RBI said.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
