RBI grants banking licence to Unity Small Finance Bank

• Reserve Bank of India granted a banking licence to Unity Small Finance Bank Ltd (USFBL).
• The bank was established jointly by the Centrum Financial Services Ltd (CFSL) and Resilient Innovations Private Limited (BharatPe), to carry on a SFB business in India.
• RBI had accorded “in-principle” approval to CFSL, a wholly owned subsidiary of Centrum Capital, on June 18 to set up a small finance bank (SFB).

Small Finance Banks

• It is a specific segment of banking created by RBI under the guidance of Government of India with an objective of furthering financial inclusion.
• It do so by primarily undertaking basic banking activities to un-served and underserved sections including small business units, small and marginal farmers, micro and small industries and unorganized entities.
• Like other commercial banks, these banks can undertake all basic banking activities including lending and taking deposits.

Capital requirement

• The minimum paid-up equity capital for small finance banks shall be Rs. 100 crore.

Prudential norms

• The small finance bank will be subject to all prudential norms and regulations of RBI as applicable to existing commercial banks.
• This includes the requirement of maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). No forbearance would be provided for complying with the statutory provisions.
• The small finance banks will be required to extend 75 per cent of its Adjusted Net Bank Credit (ANBC) to the sectors eligible for classification as priority sector lending (PSL) by the Reserve Bank.
• At least 50 per cent of its loan portfolio should constitute loans and advances of upto Rs. 25 lakh.