RBI Announces Decision on Applications for 'On Tap' Licensing of Small Finance Banks

The Reserve Bank of India (RBI) has reached a verdict on two applications submitted under the Guidelines for 'On Tap' Licensing of Small Finance Banks, as part of its ongoing efforts to expand financial inclusion and diversity in the banking sector.

Background

With a total of 13 applications received for the establishment of banks under the Guidelines for 'On Tap' Licensing of Universal Banks and Small Finance Banks, the RBI has been diligently reviewing each proposal to ensure compliance with regulatory standards and suitability for licensing. The names of the applicants were previously disclosed in press releases issued on various dates in 2021, 2023, and 2024.

Decision on Applications

Following a thorough examination process, the RBI has concluded that two applicants, namely Dvara Kshetriya Gramin Financial Services Private Limited and Tally Solutions Private Limited, were not deemed suitable for the grant of in-principle approval to establish a small finance bank. This decision was based on an assessment of various factors, including regulatory compliance, financial viability, and alignment with the objectives of promoting financial inclusion.

Remaining Applications

While decisions have been reached on the aforementioned applications, the RBI continues to evaluate the remaining two applications under examination. These applications will undergo a similar rigorous assessment process to determine their suitability for in-principle approval.

Commitment to Financial Inclusion

The RBI reaffirms its commitment to promoting financial inclusion and fostering a diverse banking landscape through the 'On Tap' Licensing framework. By facilitating the establishment of small finance banks, the central bank aims to address the banking needs of underserved and marginalized segments of society, thereby contributing to broader economic development and inclusive growth.

Looking Ahead

As the evaluation process for the remaining applications progresses, stakeholders eagerly await further updates from the RBI regarding the licensing of small finance banks. The central bank remains dedicated to ensuring transparency, fairness, and prudence in its decision-making process, in line with its mandate to maintain financial stability and promote the welfare of the Indian economy.

The announcement underscores the RBI's unwavering commitment to fostering a resilient and inclusive banking ecosystem, in which diverse institutions play a pivotal role in serving the diverse needs of the nation's populace.