Big hope for Small Finance Bank, clarity will be available soon in the process of becoming a universal bank.

RBI will soon issue clear guidelines on converting Small Finance Bank to a Universal Bank. A universal bank license will be given immediately on fulfilling the conditions of top-basis licensing. This will accelerate banking expansion and reduce uncertainty.

RBI Update: The Reserve Bank of India (RBI) is preparing to speed up and clarify the process of converting Small Finance Banks into Universal Banks. RBI may soon issue guidelines or clarifications related to this, which will make it clear what the requirements will be related to listing, time limit and universal bank license. The regulator wants that when a Small Finance Bank fulfills the prescribed conditions, it can get the license of Universal Bank on “Tap Basis” i.e. directly and instantly, so that there is no unnecessary delay and the transition can be made easy.

What is RBI's intention?

Experts believe that if this clarification comes soon and “tap basis” licensing is implemented, then this will be a big opportunity for major small finance banks like AU Small Finance Bank, Ujjivan Small Finance Bank, Equitas Small Finance Bank and Suryoday Small Finance Bank. They can expand their products, branch network and customer base manifold through universal banking.

This initiative of RBI will simplify the path of new entry or expansion as well as increase regulatory transparency. The bank will not have to delay strategic decisions due to uncertainty in the past. Getting a clear roadmap will also enable better coordination in capital raising, corporate governance, and listing plans.