The Reserve Bank of India (RBI) lay out with guidelines for the voluntary conversion of small finance banks (SFBs) into universal banks.
Banking & Finance
The Reserve Bank of India (RBI) lay out with guidelines for the voluntary conversion of small finance banks (SFBs) into universal banks. To be eligible for conversion into a universal bank, the RBI stipulates that only listed SFBs will qualify. Those intending to convert must have a minimum net worth of Rs1,000 crore. Also, the SFBs must have a scheduled status and a satisfactory track record of at least five years with a gross non-performing asset (NPA) of 3 percent or less and a net NPA of 1 percent or less in the past two financial years. Furthermore, interested SFBs must have reported a net profit in the past two financial years and met the prescribed capital adequacy norms. The RBI requires SFBs to provide a detailed rationale for their desire to convert into universal bank. Those with a diversified loan portfolio will be preferred. Further, upon transition, the bank will be subjected to all the norms including NOFHC structure (as applicable) as per the said guidelines.
The RBI granted licenses to the first set of SFBs, totalling 10, in 2015, and most of them began operations in 2016-17.
Founded- 1 April 1935, Kolkata
Founder- British Raj
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