Small finance banks (SFBs) will be allowed exemption
from the existing regulatory ceiling on inter-bank borrowings till the
existing loans mature or up to a period of three years, whichever is
earlier, according to the operating guidelines issued by the Reserve
Bank of India.
Thereafter, SFBs’ inter-bank
borrowings will be on par with scheduled commercial banks. In this
context, the RBI clarified that the borrowings made by the SFB after
commencement of operations will be subject to inter-bank borrowing
limits.
The exemption from the existing regulatory
ceiling on inter-bank borrowings is only applicable to the legacy
borrowings that are migrated to the opening balance sheet of the SFB on
the day of commencement of an SFB’s operations.
The
RBI said SFBs are permitted to purchase portfolios of loans classified
as standard assets only from banks and NBFCs for the specific purpose of
meeting the sub-targets within the 40 per cent priority sector lending
target as applicable to commercial banks. They are not permitted to
purchase non-performing loans.
The SFBs may engage
all permitted entities, including the companies owned by their business
partners and own group companies, on arm’s length basis as business
correspondents.
These companies can have their own
branches managed by their employees operating as “access points” or may
engage other entities/persons to manage the “access points” which could
be managed by the latter’s staff.
According to the
operating guidelines, SFBs may, at their discretion, issue passbooks for
the deposit accounts; they should give written/printed proof of the
first time deposit, in addition to the electronic confirmation of the
deposit. These banks should send a statement of accounts once every six
months to the registered address free of cost, if passbooks have not
been issued. They may provide the statement of accounts in paper form on
request on chargeable basis or otherwise, if passbooks have not been
issued.
SFBs may provide account information through
multiple user-friendly modes, such as SMS and/or Internet banking; and
they should provide electronic confirmation through SMS/e-mail/printed
proof for each account transaction.
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