Salient features of Draft Guidelines:
- Registration and licensing: The SFB shall be registered as a public limited company under the Companies Act, 2013. It will be governed by the provisions of the Banking Regulation Act, 1949 and Reserve Bank of India Act, 1934.
- Status: The small finance banks will be given scheduled bank status once they commence their operations.
- Eligibility Criteria:
- Existing NBFCs, micro finance institutions and local area banks in the private sector, which are controlled by residents, can opt for conversion into small finance banks.
- Proposals from public sector entities and large industrial house/business groups, and autonomous boards/bodies will not be entertained.
- Capital requirement:
- The minimum paid-up voting equity capital for small finance banks shall be Rs.200 crore, except for such small finance banks which are converted from UCBs.
- An SFB shall be required to maintain a minimum capital adequacy ratio of 15 per cent of its risk weighted assets (RWA) on a continuous basis.
- Promoters’ contribution: The promoters should hold a minimum of 40 per cent of the paid-up voting equity capital of the bank, which would remain locked in for five years from the date of commencement of the bank's business.
- Listing of shares: After the SFB reaches the net worth of Rs 500 crore, listing will be mandatory within three years of reaching that net worth. Also, SFBs having net worth of below Rs 500 crore could also get their shares listed voluntarily, subject to fulfilment of the requirements of the capital markets regulator.
- Foreign shareholding: The foreign shareholding in the small finance bank would be as per the extant Foreign Direct Investment (FDI) policy for private sector banks.
