Key Points
Small finance banks such as AU, Equitas and Ujjivan, which aspire to become "universal banks" as they complete the mandatory five-year cooling off period, are now awaiting the regulators signal before they officially seek licence upgrades...
Some of these so-called small banks are already bigger in size than quite a few old-generation private sector lenders, while a universal bank licence would test their skills on underwriting and bandwidth to handle bigger businesses...
However, as things stand now, there is no specific communication from the Reserve Bank of India (RBI) on conversion of small finance banks into a universal lender, which would allow the current set of small lenders more flexibility in the way they do business and leverage capital...
If a small finance bank gets a universal label, its capital adequacy requirement would immediately come down to around 11.5% (including capital conservation buffer) from 15%, the priority sector lending norm would be lower at 40% instead of 75%, and the stipulation of having at least 50% of loan portfolio in loans less than Rs 25 lakh would no longer exist..
We will apply for a universal banking licence when the window opens for it and subject to our qualifying to norms that may be applicable, said PN Vasudevan, managing director of Equitas Small Finance Bank..
You might be interested in
RBI rejects 3 applications for setting up small finance banks
04, Jul, 23The Reserve Bank of India has rejected three applications, including that of West End Housing Finance, for setting up small finance banks. These applications were found not suitable for granting of in-principle approval to set up small finance banks, it said in a statement on Tuesday.
Small finance banks thinking big likely to switch on the M&A mode
14, Nov, 23AU Small Finance Bank's move to acquire Fincare Small Finance Bank may encourage others to explore inorganic opportunities, industry captains believe, as bigger balance sheets would put them on a stronger platform to take on their bulge-bracket rivals, especially when it comes to mobilising public deposits.
9.5% interest on FDs in small finance banks: How to invest in fixed deposits 'safely' to get best return
28, Mar, 23Small finance banks are offering as high as 9.5 per cent interest rate on fixed deposits. Should you go book an FD in a small finance bank to get sky-high return? Here are the key things you need to check while booking a fixed deposit in small finance banks.
ESAF SFB to explore opportunity to be a universal bank
06, Apr, 23The small finance bank intends to complete its initial public offering in 2023-24 (April-March).
FD interest rates: 6 banks offer 9% or more on senior citizen FDs
17, Dec, 23Given below is a list of six banks which are offering more than 6% interest on fixed deposits (FDs) of an amount less than Rs 2 crore. The highest FD interest rate is being offered by Unity Small Finance Bank.
Fixed deposits interest rates to rise; SFBs offer 75-100 bps higher FD rates than PSBs, private banks
27, Apr, 23Experts believe that with liquidity becoming tighter and credit demand remaining strong, lending institutions are in the race to acquire the maximum deposits. SFBs are offering FD rates that are 75-100 basis points higher than those offered by PSBs and private banks.