RBI to offer other differentiated bank licences

Mumbai: The Reserve Bank of India (RBI) on Tuesday said that it would look at introducing another round of differentiated bank licences, which could allow for licencing of entities that specialize in only one aspect of banking.

“In addition to recently licensed differentiated banks such as payments banks and small finance banks, the Reserve Bank will explore the possibilities of licensing other differentiated banks such as custodian banks and banks concentrating on whole-sale and long-term financing. A paper in this regard will be put out for comments by September 2016,” said the RBI in its monetary policy review on Tuesday.

Last year, the RBI had given an in-principle nod to 10 small finance banks and 11 payment banks, which are due to launch operations later this year or early next year. Both payment banks and small finance banks will not be full service banks but target a specific part of the banking business. For instance, small finance banks will offer basic banking services and lend to unserved and underserved sections including small business units, small and marginal farmers, micro and small industries, and entities in the unorganized sector. Payment banks will offer basic savings, deposit, payment and remittance services to people without access to the formal banking system.

In line with that thinking, the RBI is now looking to bring in other differentiated entities -- this time focussed on wholesale lending and long-term financing.

The move, once detailed, will help widen the sources of funds available to the corporate sector. In particular, the development of entities focussed on long-term financing will ease the burden of infrastructure financing, which currently falls on the banking sector.

Separately, the RBI said it would issue a fresh discussion paper by 30 April 2016 on large borrowers meeting a part of their funding requirements from the markets.

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