At least three potential small finance banks, including Janalakshmi, have not started small finance banks after receiving in-principle licence 18 months back!
While Guwahati headquartered RGVN Microfinance has received the final licence from Reserve Bank of India earlier this month to set up a small finance bank and likely to start operations soon, Disha Microfinance and Janalakshmi are yet to receive a final licence.
The Reserve Bank of India had given licences to 10 small finance banks in September 2015. Of these, seven have already started operations. The latest to do so is AU Financiers that has converted itself into AU Small Finance Bank. While issuing the ‘in-principle’ licence, RBI had said the approval granted will be valid for 18 months to enable the applicants to comply with the requirements under the guidelines and fulfill other conditions as may be stipulated by the RBI.
“On being satisfied that the applicants have complied with the requisite conditions laid down by it as part of ‘in-principle’ approval, the RBI would consider granting them a licence for commencement of banking business,“ RBI had said “These 10 companies have been restructuring their share holding and complying with rules on foreign institutional holding for a final licence.”
While Equitas and Ujjivan have listed shares on the stock exchange to meet the regulatory rules, Disha Microfin and Future Financial, have merged to form a stronger company. Post demonetisation, MFIs have been rethinking their business model. Some argue that it makes sense to continue as a micro finance company rather than start a bank. “We have applied for a licence in January”, said VS Radhakrishnan, MD of Janalakshmi Financial Services. “The in-principle licence required us to submit final license within 18 months.”
So yes, we all are waiting for RBI’s approvals to start operations!