Page 31 - Banking Finance February 2018

ARTICLE

PAYMENT & SMALL

FINANCE BANKS -

A STEP TO FOSTER

FINANCIAL

INCLUSION

Introduction : massive efforts to narrow the social and economic divide, it was
felt that more agencies should be brought in to strengthen the
Providing banking services to deprived people, at affordable
efforts for financial inclusion. In an attempt to make sure that
rates, is amongst top national priorities. Deep concerns in
all sections of society and people living in remote rural areas
regard to the banking practices that tend to exclude rather
have access to banking facilities, the RBI with the objective of
than attract vast sections of population from the formal
furthering financial inclusion, worked on the proposal to
financial system, urged the RBI to continue its efforts to
introduce niche & differentiated banks i.e small finance banks
ensure extension of banking facilities to all unbanked villages
and evolve policy guidelines to address this issue .In 2014, ( SFBs) and payment banks. It is the strong opinion of the
regulatory authority that the Small and Payments banks are
,the government, in a major initiative to extend formal
the way forward for India to achieve financial inclusion.
financial services to the excluded population, launched
Pradhan Mantri Jan Dhan Yojna ( PMJDY).
Thus based on the feedback received on draft guidelines,
RBI came out with final guidelines for Payment Banks and
With 1.2 billion citizens and 650,000 villages spreading over
Small Finance Banks in November 2014. RBI granted "in-
3.288 million sq km area, the growth recorded so far, though
principle" approval to 11 Applicants for Payments Banks on
gratifying, is nowhere near our fellow emerging markets. August 19, 2015 and to 10 applicants for Small Finance Banks
Considering the size of India's population and the need for
(SFBs). This paper discusses the RBI's licensing guidelines for
small finance banks and payments banks, opportunities,
About the author challenges and these niche bank's role in the banking space.

M. Ramamoorthy RBI's licensing guidelines for Payment
BE(Mechanical), CAIIB, MBA (Banking
Finance), F.I.V Banks
Senior Manager (Faculty- Credit Discipline )
Union Bank of India Staff College Objectives :
Bangalore
The objectives of setting up of payments banks will be to

BANKING FINANCE | FEBRUARY | 2018 | 31

Sashi Publications Pvt Ltd Call 8443808873/ 8232083010