Centrum Financial Services gets `in-principle' approval for setting up small finance bank

The Reserve Bank of India (RBI) has decided to grant “in-principle” approval to Centrum Financial Services Limited for setting up a small finance bank. RBI would consider granting a licence for commencement of banking business on being satisfied that the applicant has complied with the requisite conditions laid down by RBI as part of “in-principle” approval.

RBI had, in December 2019, issued general guidelines for ‘on tap’ licensing of small finance banks in the private sector.” 
The “in-principle” approval has been accorded in specific pursuance to the Centrum Financial Services’ offer dated 1 February 2021 in response to the Expression of Interest notification dated 3 November 2020 published by the Punjab & Maharashtra Co-operative Bank Ltd, Mumbai.
RBI’s December 2018 guidelines for ‘on tap’ licensing of small finance banks in the private sector varies vastly from the earlier guidelines on small finance banks issued on 27 November 2014.
As per the revised guidelines, 
  • The licensing window will be open on-tap; 
  • Minimum paid-up voting equity capital / net worth requirement shall be Rs200 crore; 
  • Primary (urban) co-operative banks can transit into small finance banks with initial net worth of Rs100 crore and increase it Rs200 crore within five years (the net-worth of all SFBs currently in operation is in excess of Rs200 crore; 
  • SFBs will be given scheduled bank status immediately upon commencement of operations;
  • SFBs will have general permission to open banking outlets from the date of commencement of operations; 
  • Payments Banks can apply for conversion into SFB after five years of operations, if they are otherwise eligible as per these guidelines.