Two Small Finance Banks start operations from Jan 23

Mumbai, Jan 24 (KNN) In a move that would help the micro enterprises get access to credit, two Small Finance Banks - Utkarsh Small Finance Bank Limited and Suryoday Small Finance Bank Limited – have commenced its operations from January 23, 2017.

In a press release, RBI said, Utkarsh Micro Finance Private Limited  and Suryoday Small Finance Bank Limited “has commenced its operations as a small finance bank with effect from January 23, 2017.”

 The Reserve Bank has issued a licence to the bank under Section 22 (1) of the Banking Regulation Act, 1949 to carry on the business of small finance bank in India.

Utkarsh Micro Finance Private Limited, Varanasi and Suryoday Micro Finance Private Limited, Navi Mumbai were amongst the 10 applicants which were issued in-principle approval for setting up a small finance bank.

It may be recalled that the Committee on Financial Sector Reforms (Chairman: Dr. Raghuram G. Rajan), 2009 had examined the relevance of small banks in the Indian context. The Committee had opined that there was sufficient change in the environment to warrant experimentation with licensing of small banks.

It recommended allowing more entry to private well-governed deposit-taking small finance banks (SFBs) offsetting their higher risk from being geographically focussed by requiring higher capital, a strict prohibition on related party transactions, and lower allowable concentration norms. (KNN Bureau)