The Reserve Bank of India (RBI) will soon issue a clarification on which small banks can become universal banks. It may soon issue the guidelines on what will be the requirements related to listing, time limit, and universal bank license.
RBI wants that after getting clarity, Small Finance Banks should not take much time to become Universal Banks, sources familiar with the development told Zee Business.
“There should be a system to get a Universal Bank license from Small Finance Bank directly after fulfilling the conditions,” the sources said.
There is still a lot of scope for Universal Bank in the country.
What is the scope of universal banking?
Universal banking has a huge scope in the country as it offers a wide range of banking services, covering corporate, retail, investment, and many other segments. Small finance banks, which are particularly rooted in financial inclusion and high growth rates, can expand rapidly if they become universal banks. RBI is looking at this change with a view to strengthening both banking depth and long-term stability in the country.
This initiative of the RBI will not only ease the path for new entry or expansion but will also increase regulatory transparency. The bank will not have to delay strategic decisions due to uncertainty in the past. Getting a clear roadmap will also enable better coordination in capital raising, corporate governance, and listing plans.
Last month, RBI Governor Sanjay Malhotra said, “NBFCs can become SFBs, universal banks, but the eligibility criteria for companies and NBFCs are not very different.”
Also Read: Can large NBFC become small or universal bank? Know what RBI governor says
