Business Standard reports RBI said small finance banks (SFBs) could drive financial inclusion. The apex bank will soon issue draft guidelines on tap licensing. However, RBI believes performance of payment banks will be reviewed before considering their licensing to be put on tap.
A source familiar with the development says on tap licensing could be helpful for entities that work in the micro-finance sector. This will enhance their liability profile, and provide them with a sustainable growth model, the source claims.
SBI Chairman has said RBI’s decision to issue draft for “on-tap” licensing of SFBs will boost the sector.
According to RBI, the growth of SFBs has so far been predominantly driven by the strategy of offering higher deposit rates to attract customers.