RBI ‘In Principle’ Approval To 10 Small Finance Banks

04 December, Mumbai

With RBI deciding to grant ‘in-principle’ approval to 10 applicants for setting up small finance banks (SFBs), out of which eight are micro finance institutions (MFIs), a new paradigm has emerged in the financial inclusion space.

Earlier, RBI had granted in-principle approval to 11 applicants for setting up of payment banks, Small Industries Development Bank of India (SIDBI) said in a statement here today. In April 2014, RBI had also granted in-principle approval to two entities — Bandhan Financial Services private Limited (BFSPL), an MFI, and IDFC Limited for setting up full fledged universal banks, which have since become operational.

The granting of in-principle SFB license to MFIs is a step towards creating a new generation of specialised entities which will effectively cater to the financial needs of the MSMEs especially the informal sector.Out of the 10 selected applicants, one is an NBFC, one local area bank and the rest eight are MFIs.

Nine out of the 10 applicants are existing partner financial institutions (PFIs) of SIDBI supported at various stages of their organisational journey under the micro credit dispensation of SIDBI.

SIDBI, the principle financial institution for promotion, finance and development of the MSME sector, launched its microfinance support programme way back in 1994.

Learning from the pilot phase, in 1999, it set up a specialised department — SIDBI Foundation for Micro Credit (SFMC) with a mission to create a national network of strong, viable and sustainable institutions for providing microfinance services to the unreached.