Tag: RBI

Private banks cut more rates than PSBs as overall rate transmission improves, BFSI News, ET BFSI

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Rate transmission, the pet peeve of the Reserve Bank of India has improved substantially following the introduction of external benchmarks with the private banks sniping more than public sector peers.

The overall lending rates have fallen as much as 100 basis points, with the weighted average lending rates for outstanding rupee loans of commercial banks fell 96 basis points between March 2020 and October 21, according to RBI data.

But these rates have fallen more sharply for private sector banks at 109 basis points compared to 85 bps dip for public sector banks and 187 bps for the foreign banks in the country.

The central bank has however cut its benchmark repo rate much higher by 115 bps during the period, and also introduced a number of measures to enhance liquidity of banks to deal with the pandemic induced crisis.

Policy transmission

Policy transmission has been at a much faster pace since the pandemic. In the 19-month period prior to the onset of the pandemic, the benchmark policy 135 bps. But the banks lowered their lending rates only by 15 basis points between March 2019 and March 2020.

A research paper by the Reserve Bank of India economist notes that the transmission of policy repo rate changes to deposit and lending rates of commercial banks (SCBs) has improved since the introduction of external benchmark-based pricing of loans.

The paper said that the transmission showed further improvement since March 2020 on account of sizeable policy rate cuts, and persisting surplus liquidity conditions resulting from various system level as well as targeted measures introduced by the Reserve Bank – cut in the cash reserve ratio (CRR)

requirements, long-term repo operations (LTROs), TLTROs, refinancing window for All India Financial Institutions (AIFIs), sector/segment specific liquidity measures (Mutual Funds, Small Finance Banks, Micro Finance Institutions/Non-Bank Financial Companies), special open market operations and regular OMOs.

External benchmarks

The share of external benchmark-linked loans in total outstanding floating rate loans increased from 2.4 per cent in September 2019 to 32 per cent in June 2021, contributing to a faster and fuller transmission.

There has been a concomitant fall in the share of MCLR-linked loans from 83.6 per cent to 60.2 per cent, over the same period, although these still have the largest share in outstanding floating rate loans.

As lending rates under the external benchmark regime undergo automatic adjustments with the changes in the benchmark rate, banks are incentivised to adjust their term as well as saving deposit rates to cushion their net interest margins and profitability, which then hastens the adjustment in banks’ marginal cost of funds, and MCLRs.

Earlier hurdles

While the Reserve Bank has periodically refined the process of interest rate setting by banks, transmission has hitherto been sluggish as banks relied on their own cost of funds, which is internal benchmarks.

“The systems were also characterised by opacity, especially regarding the interest rate resetting practices for existing borrowers,” the central bank said.

To address these rigidities, the RBI had decided to move to an external benchmark system – an interest rate outside the control of a bank and not necessarily linked to its internal costs – for select categories of loans (viz., all new floating rate personal or retail loans and floating rate loans to micro and small enterprises (MSEs) to the policy repo rate or 3-month or 6-month T-bill rate or other specified benchmarks effective October 1, 2019, and for medium enterprises effective April 1, 2020).



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India’s new crypto law set to red-flag chit fund, MLM business models, BFSI News, ET BFSI

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India is set to red flag several investment schemes launched by individuals and cryptocurrency exchanges that are similar to chit funds, multi-level marketing (MLM) and systematic investment plans (SIP), as it seeks to build a robust regulatory framework to protect vulnerable rural populations buying risky crypto assets.

Regulators including the Reserve Bank of India (RBI) and Securities and Exchange Board of India (Sebi) have raised concerns before a parliamentary panel about how some individual investors are collecting money in small towns – with business models resembling those of chit funds – for investing in crypto assets.

RBI has pointed out how some Indians have even started accepting cryptocurrency payments for export services, thus posing a broader systemic risk.

“It is observed that some individuals are going to small towns and raising money from people, mainly in cash, with the promise of great returns in cryptocurrencies,” said a person familiar with the representations to central lawmakers. “This is exactly like chit funds, but without any framework or regulations.”

Regulators have reportedly flagged instances in the hinterland, particularly in Uttar Pradesh and Bihar, where collective investment schemes or chit funds have been floated to pool money for alleged investments in cryptocurrencies. Crypto exchanges and related associations have also made representations to the panel of central lawmakers. Officials at Sebi and RBI could not immediately be reached for comments.

Besides chit funds, even MLM-like schemes are being promoted by some unregulated entities, warn insiders. “In India, a lot of scams are driven by smart contracts – anyone can launch their own coin and start raising money,” said Siddharth Sogani, founder, CREBACO, a cryptocurrency research firm.

Scam Schemes
“There is one scam every week in India where fraudsters are trying to do a multi-level-marketing or collective investment scheme, which promises astronomical returns to people.”

CREBACO had red-flagged a “fake cryptocurrency exchange” that announced hiring plans. The exchange was only collecting money and was a “scam,” said insiders. In another instance, a small company started collecting money from small investors in Uttar Pradesh with the promise of doubling their invested funds in a year. The company claimed it would invest the pooled money in cryptocurrencies. “There were many other instances where it was found that individuals are just taking advantage of the cryptocurrency craze and regulators need to protect the rights of small investors,” said a person aware of developments.

Mitigating Risk
RBI has, in the past, said cryptocurrency poses a systemic risk to India’s economy. Most exchanges have distanced themselves from individuals collecting money and investing in crypto assets with a business model not dissimilar to those at chit funds.

Another person close to the developments said concerns were also raised by Sebi on the nomenclature used by exchanges. New regulations could spell out what exchanges can say and what they cannot. “We have to draw a line at what we can say and what we can’t. Maybe, when you say ‘investment,’ it may not be fine; calling it SIP may not be fine too, but as of now, we don’t know what terms to use,” said Sathvik Vishwanath, co-founder and chief executive of Unocoin, a cryptocurrency exchange.

“These (terms) are used haphazardly by different companies for different things. Currently, exchanges have to explain some concepts to a common man who doesn’t have an idea what we are talking about. So, sometimes we have to come up with something to compare it with,” he added.

Cryptocurrency exchanges and associations have even raised concerns about how some fly-by-night crypto exchanges have mushroomed in the past few months, from which the government should differentiate genuine exchanges.

Apart from that, the government could also put out some framework for how money can be raised through an Initial Coin Offering (ICO), which is the cryptocurrency equivalent of an IPO. “Sebi should regulate ICOs in India if these instruments are allowed,” said Sogani of CREBACO.

Regulation Jitters
Investors are wary after New Delhi decided to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, in the winter session of Parliament. Both investors and venture capitalists sounded cautious after the Lok Sabha bulletin was published last week.



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Changes in Banking Regulation Act in works, BFSI News, ET BFSI

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The government is eyeing changes to the Banking Regulation Act to bar new bank licence holders from certain specified business activities through the main banking entity.

The move is aimed at aligning certain sections of the Banking Regulation Act with the norms stipulated by the banking regulator, Reserve Bank of India.

Provisions being examined as part of the proposed amendment include rules which restrict new bank license holders to carry out specified business activities both from a separate entity and the bank.

At present, under Section 19 of the BR Act, a banking company can form any subsidiary for undertaking any business permissible for a banking company to undertake. “We have received representation from various stakeholders, this is being examined but no decision has been taken,” said a government official aware of the developments adding that there has been a demand to bring parity as existing banks including foreign lenders are allowed to undertake such business both through subsidiary and in-house.

In 2016, the RBI had issued “Guidelines for ‘on tap’ Licensing of Universal Banks in the Private Sector” under which it stipulated that specialised activities can be conducted through a separate entity after prior approval from RBI under the non-operating financial holding company or NOFHC. But, it has to be ensured that similar activities are not conducted through the bank.

In their representation, some stakeholders argued that the RBI guidelines and the provisions under the Banking Regulation Act are not in sync. The internal working group of RBI had also recommended that the concerns with regard to banks undertaking different activities through subsidiaries or associates need to be addressed through suitable regulations till the NOFHC structure is made feasible and operational.



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Cryptos, far from the regulators’ glare

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The manner in which cryptocurrencies which began as innocuous playthings of geeks went on to become the most sought after asset class and a threat to traditional cross-border payment channels, while managing to stay beyond the reach of regulators, shows the challenges that digital innovation pose.

The original white paper on Bitcoin, put out by its founder, the anonymous Satoshi Nakamoto, described it as, “a purely peer-to-peer version of electronic cash (that) would allow online payments to be sent directly from one party to another without going through a financial institution.”

Most regulators did not take it seriously then, since its usage appeared to be limited to a few rebels who wanted to express their displeasure against the traditional fiat currencies. But Bitcoin has cloned thousands of other cryptocurrencies, which are no longer innocent payment channels but have morphed into a highly speculative asset and conduits of illicit cross-border money transfers.

The experience with cryptocurrencies shows that fintech products and innovations need to be taken more seriously going ahead and quickly brought under the regulatory radar before they grow in to a many-headed monster. There are other similar digital innovations such as digital lending or algo trades that have grown surreptitiously in the shadows in a similar manner with the regulators struggling to frame rules them.

Digital lending entities

More than a decade ago, the usurious practices of microfinance companies charging exorbitant rates of interests, harassing and shaming borrowers had led to a spate of suicides making the RBI issue regulations to check the lenders in this space. The same sequence of events is now being repeated, but in digital space.

As the Covid-19 pandemic hit the livelihoods and small businesses, digital lending apps turned out to be a ready source of money to these small borrowers. While funds could be accessed for extremely short periods, ranging from 7 to 15 days, the rates of interest charged by the digital lenders were extremely high, ranging from 60 to 100 per cent, according to reports. These apps required the borrower to give them permission to access all the information on their smartphones under the garb of doing KYC checks. The problem started when the borrowers were unable to repay the loans. They were harassed, publicly shamed and even blackmailed leading to some borrowers even resorting to the extreme step of taking their lives.

The RBI had taken note of these malpractices and issued an advisory in December and had also opened a portal for registering complaints. It recently set up a working group to give recommendations on regulating these businesses.

The swiftness shown by the central bank in trying to bring digital lending entities under regulatory purview is laudable. It’s clear that there is demand for loans from such digital lenders and total clamp-down on this space is not a good idea. Weeding out the bad players and ensuring that the lending activities continue with sufficient protection to borrowers is the way forward.

But the point to note is the manner in which the miscreants were quick to find a regulatory gap and begin operations. This requires equal amount of agility from regulators as well.

Dealing with algo trading

Another instance of a digital innovation blind-siding regulators was seen in the proliferation of algorithmic or programmed trading in Indian stock exchanges. These trades that require little or no manual intervention, where computer programs shoot orders to the exchange servers at lightning speed, currently account for over 60 per cent of turnover in derivatives section and 50 per cent in cash segment of the NSE.

There was a lot of furore about these algo trading around 2012 when it was first revealed that programmed trading, especially from colocation sites located close to exchange servers, are ahead of the small investors in trade execution due to their proximity to the exchanges. Further, the high-frequency-trading programs and other rogue programs were gaming the market to stay ahead of other traditional traders.

But no one could explain how or when algo trading had started on Indian exchanges and how they had become so widespread by 2012. The market regulator was in a fix then, since banning algos would have resulted in depriving liquidity from market and making FPIs turn away. SEBI decided to embrace algos and regulate them by issuing guidelines to exchanges, intermediaries and investors about dealing with algos.

We had dealt with this logjam in https://www.thehindubusinessline. com/opinion/columns/lokeshwarri-sk/ learn-to-live-with-algo-trading/ article22995759.ece

Regulating cryptos will be tricky

With fintech adoption growing at a break-neck speed in the country with growing smart phone and data accessibility, it is clear that innovative products that fox regulators and at times border on the illegal will keep cropping up. Regulators need to be on their toes and increase the strength of their digital surveillance team which has the skills to understand these products.

But, while innovations like digital lending and algo trading can be regulated and streamlined by regulators, cryptocurrencies will be much more challenging. This is because — one, it is hard to categorise cryptocurrencies as either currency or asset. So determining the regulator for them is quite difficult. Two, the creation or mining of the cryptocurrencies takes place globally and hence cannot be controlled. While trading can be banned in India, it will continue in other global trading platforms which can be easily accessed by Indians. Three, the investors of these crypto assets are mostly not the investors of traditional asset classes.

Hence it may not be possible for issuing reactive regulations for these crypto assets and absorb them into the mainstream as done for other tech innovations. A global consensus on crypto mining and trading could be the way forward, with uniform rules and regulations framed for crypto trading platforms in all countries. While the contours of the Cryptocurrency Bill to be presented in Parliament is awaited, the last word has not yet been said on taming this beast.

The last two decades have seen rapid innovation in fintech with these digital entities seeping into spaces hitherto occupied by traditional banks, insurance companies, stock brokers, investment advisories, and so on. Some of these entities have tried pushing the boundary between the acceptable and unacceptable, ethical and unethical, legal and illegal and, in many instances, regulators have been caught sleeping at the wheel. Regulators will have to upskill and increase the manpower equipped to deal with fintech entities so that they are not caught off-guard, once too often.

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States debt-to-GDP ratio worryingly higher than FY23 target, says RBI report, BFSI News, ET BFSI

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Mumbai, The combined debt-to-GDP ratio of states is expected to remain at 31 per cent by end-March 2022 which is worryingly higher than the target of 20 per cent to be achieved by 2022-23, according to a RBI report. The Reserve Bank’s annual publication titled ‘State Finances: A Study of Budgets of 2021-22’ further said as the impact of the second COVID-19 wave wanes, state governments need to take credible steps to address debt sustainability concerns.

“The combined debt to GDP ratio of States which stood at 31 per cent at end-March 2021 and is expected to remain at that level by end-March 2022, is worryingly higher than the target of 20 per cent to be achieved by 2022-23, as per the recommendations of the FRBM Review Committee,” it said.

In view of the pandemic induced slowdown, in its projections, the 15th Finance Commission expects the debt-GDP ratio to peak at 33.3 per cent in 2022-23 (in view of the higher deficits in 2020-21, 2021-22 and 2022-23), and gradually decline thereafter to reach 32.5 per cent by 2025-26.

The RBI report noted that the budgeted consolidated gross fiscal deficit (GFD) of 3.7 per cent of GDP for states for the year 2021-22 – lower than the 4 per cent level as recommended by the FC-XV (15th Finance Commission)- reflect the state governments’ intent towards fiscal consolidation.

According to the report, in the medium term, improvements in the fiscal position of state governments will be contingent upon reforms in the power sector as recommended by FC-XV and specified by the Centre – creating transparent and hassle-free provision of power subsidy to farmers; preventing leakages; and improving the health of the power distribution companies (DISCOMs) by alleviating their liquidity stress in a sustainable manner.

“Timely payments of state dues to DISCOMS and, in turn, by them to Generation Companies (GENCOS) hold the key to the sector’s financial health,” it said.

The report said undertaking power sector reforms will not only facilitate additional borrowings of 0.25 per cent of GSDP (Gross State Domestic Product ) by the states but also reduce their contingent liabilities due to improvement in financial health of the DISCOMs.

It pointed out that in 2020-21, the first wave of the pandemic posed states the critical challenge of declining revenue and the need for higher spending.

To partially offset the revenue shortfall, the report said states hiked their duties on petrol, diesel and alcohol and focused on rationalising non-priority expenditures to make room for higher expenditure on healthcare and social services.

According to the report, the year 2021-22 started on a similar note, with the outbreak of the second wave.

“However, the impact of the second wave on state finances is likely to be less severe than the first wave due to less stringent and localised restrictions imposed this time as opposed to the nationwide lockdown during the first wave of COVID-19,” it observed.



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Indian Bank reports fraud of over Rs 33cr to RBI, BFSI News, ET BFSI

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State-owned Indian Bank has reported a fraud of more than Rs 33 crore to the Reserve Bank, involving two of its accounts that turned into NPAs.

Two non-performing loan accounts, Raj Events and Entertainment and Capricorn Food Products India, have been declared as fraud and reported to the RBI as per regulatory requirement, the bank said in a stock exchange filing on Tuesday.

Both the companies caused fraud in the nature of ‘diversion of funds’.

In the case of Capricorn Food Products, the amount involved is of Rs 22.36 crore, while in the case of Raj Events and Entertainment, the fraud amount involved is of Rs 10.97 crore.

Provision held against Capricorn Food as of September 30, 2021 stood at Rs 8.54 crore and of Rs 1.65 crore in the case of Raj Events and Entertainment, the bank said.

Indian Bank shares closed at Rs 142.75 apiece on BSE, down 0.94 per cent from the previous close.



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To assist Reliance Capital Administrator, RBI forms three-member Advisory Committee

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The Reserve Bank of India (RBI) has constituted a three-member Advisory Committee to assist the Administrator of Reliance Capital.

The members of the Advisory Committee include Sanjeev Nautiyal, former Deputy Managing Director, State Bank of India, Srinivasan Varadarajan, former Deputy Managing Director, Axis Bank and Praveen P Kadle, former Managing Director and CEO, Tata Capital.

“…the Reserve Bank has constituted a three-member Advisory Committee to assist the Administrator in discharge of his duties,” the RBI said on Tuesday.

“It may also be mentioned that the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 provide for the concerned financial sector regulator appointing a Committee of Advisors to advise the Administrator in the operations of the financial service provider during the corporate insolvency resolution process,” it further said.

The RBI had on November 29 superseded the board of directors of Reliance Capital and appointed Nageswara Rao Y, ex-Executive Director, Bank of Maharashtra, as the Administrator of the company.

The action was taken by the central bank after numerous defaults by Reliance Capital in repayment of its debt obligations.

Shares of Reliance Capital were locked at the five per cent lower circuit and closed at ₹18.10 apiece on BSE.

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ORF report, BFSI News, ET BFSI

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New Delhi, Nov 30 (PTI) With an estimated 15 million Indians holding digital currencies, cryptocurrencies need to be regulated like any other financial asset and it would be unwise for India to ban private crypto assets when it has the ability to capitalise on it, a study released by Observer Research Foundation (ORF) said on Tuesday. The Indian crypto asset industry has witnessed exponential growth over the last five years. An estimated 15 million crypto-asset holders have put in Rs 660 crore in these crypto asset holdings.

India now has two crypto unicorns and over 350 crypto startups in what is clearly a flourishing industry.

The report said the country is well placed to capitalise on the opportunity that crypto-assets present due to its expanding private crypto market.

“Cryptocurrencies, like any other financial asset, need to be regulated in order to ensure consumer welfare as well as promote innovation,” a statement summarising the findings of the report on Regulating Crypto Assets in India said. “It would be imprudent to place a blanket ban on private crypto assets. This would result in significant revenue loss to the government and may encourage nascent industries to operate illegally.”

The new monograph by ORF in collaboration with the Esya Centre presents a deep dive into the growth of cryptocurrency in India and proposes a balanced regulatory approach.

India, the report argues, has a history of banning goods and services that exemplify innovation in new markets. Such bans often lead to unintended consequences, which include large revenue losses to the government that impact the livelihoods of people, and have had severe implications for industries, forcing them to enter illegal markets.

It cited the recent example of the ban on the use of drones in India in 2014. That ban effectively clipped the wings of a nascent domestic industry, while people continued to use them in defiance of the ban.

Meanwhile, Chinese companies such as Da-Jiang Innovations (DJI) manufactured recreational drones during 2014-2018 at scale and now command 70 per cent of the global market. They have also diversified into end-to-end drone management services such as photo and video editing software.

In 2018, India realised that a blanket ban was ineffective and resulted in a missed opportunity for the domestic industry. It, therefore, introduced a regulatory framework to govern the use of drones in the country.

Similarly, much earlier in the pre-liberalised era, India tried to ban the import of gold. However, after several years of trying to clamp down on smuggling, the government had to withdraw the ban.

“A prohibition on the crypto assets may have similar repercussions for the crypto asset industry. Due to the decentralised nature of the technology and the ease of transferring crypto-asset using the public key, it is technically impractical to stop the inflow of crypto-asset from abroad,” the report argues.

The report is a first-of-its-kind deep-dive into the world of cryptocurrency in India – one of the fastest-growing consumer bases globally. This analysis comes at a time when the government is looking to introduce a bill to regulate the asset.

It offers key policy suggestions on building the ideal crypto regulatory framework that would both benefit India’s economy and ensure consumer welfare, the statement said.

Instead of banning, the report suggests a balanced regulatory approach, which addresses the concerns of fiscal stability, money laundering, investor protection and regulatory certainty while fostering innovation.

“Most regulatory formulae necessary to address the policy concerns related to crypto-assets, such as investor protection, foreign exchange management, money-laundering and tax evasion, already exist in financial legislation,” says co-author Meghna Bal. “They just have to be adapted to accommodate an emerging technological paradigm. The recommendations in our report show how this can be done.”

In India, classifying crypto as security, good or capital asset could lead to unintended restrictions on investment or leave regulatory gaps in key policy areas. A sui generis crypto framework that adopts the nuances of the crypto industry would be more appropriate and in keeping with emerging global trends.

The report also lays out suggestions for lawmakers on what a crypto regulatory framework must include: it must be technology-neutral, innovation-friendly and consistent, to fully harness India’s potential in this domain.

Among other things, the framework must lay down clear definitions, identify the relevant regulatory bodies and create KYC/anti-money laundering obligations, the report says.

The regulatory framework should also protect crypto asset service providers from being liable for the actions of investors on their platforms. This will help asset service providers innovate and scale new crypto-based products and offerings.

The report proposes that the Government adopt a co-regulatory approach where industry associations and authorities such as SEBI, the RBI, and the Ministry of Finance share the responsibility of oversight. Such an approach follows the Japanese model, where authorities have tasked industry associations to enforce regulations. Providing incentives to industry whistle-blowers could help players within the crypto-market self-regulate.

What India needs is a facilitative regulatory framework that would boost the growth of India’s crypto ecosystem while addressing any possible harms to consumers and society at large, it added.



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Indian Bank reports fraud of over Rs 33cr to RBI, BFSI News, ET BFSI

Banking & Finance

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State-owned Indian Bank has reported a fraud of more than Rs 33 crore to the Reserve Bank, involving two of its accounts that turned into NPAs.

Two non-performing loan accounts, Raj Events and Entertainment and Capricorn Food Products India, have been declared as fraud and reported to the RBI as per regulatory requirement, the bank said in a stock exchange filing on Tuesday.

Both the companies caused fraud in the nature of ‘diversion of funds’.

In the case of Capricorn Food Products, the amount involved is of Rs 22.36 crore, while in the case of Raj Events and Entertainment, the fraud amount involved is of Rs 10.97 crore.

Provision held against Capricorn Food as of September 30, 2021 stood at Rs 8.54 crore and of Rs 1.65 crore in the case of Raj Events and Entertainment, the bank said.

Indian Bank shares closed at Rs 142.75 apiece on BSE, down 0.94 per cent from the previous close.



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Emkay Global, BFSI News, ET BFSI

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The recent Reserve Bank of India clarification on banks’ promoter holdings is likely to benefit IndusInd Bank, if the central bank does not have any issues related to the promoters, Emkay Global said in a report.

In IndusInd Bank, the Hinduja brothers hold a 16.5 percent stake. The increase in promoter stake will boost the bank’s financial strength, and their clients will be protected.

The RBI had recently clarified that the promoters who have recently reduced their holdings to below 26% and want to increase it back, can approach the central bank. The promoter will have a choice to bring down the promoter holding to below 26% after the initial locking period is over.

The RBI retained the norm to maintain a minimum (floor) of 40% of paid-up voting equity share capital by the promoter for the first five years, but there is no cap on the promoters’ holdings in the initial five years, Emkay highlighted. That said, the cap on the promoter’s stake over 15 years has been raised from 15% to 26%, which was implemented in the case of Kotak Mahindra Bank.

Non-promoter shareholding will be capped at 10% of the paid-up voting equity share capital of the bank for natural persons and non-financial institutions and at 15% for all categories of financial institutions, supranational institutions, public sector undertaking or government. If this is allowed, then possibly HDFC may not had to bring its stake in Bandhan to 10%, Emkay said.

In the case of invoking pledged shares of a bank, the pledgee’s voting rights will be restricted to 5% till the time the pledgee obtains permission from the RBI for the regularisation of the acquisition of these shares.

The RBI has retained non-operative financial holding company (NOFHC) as the preferred structure for all new licences to be issued for universal b anks, but it will be mandatory only in cases where the individual promoters, promoting entities or converting entities have other group entities, the report said. However, banks currently under NOFHC, such as IDFC First Bank and Bandhan Bank, may be allowed to exit such a structure if they do not have any other group entities in their fold.

The RBI has given in-principle approval to IDFC First Bank-Bandhan Bank, but IDFC will have to first divest stake in its MF/tech businesses for a reverse merger with IDFC First Bank, while Bandhan Bank is not keen on diluting the structure as of now, the report said.

Furthermore, on the relaxation of the listing norms for future small finance banks (SFBs), existing SFBs in queue, including Utkarsh, Fincare, Jana, ESAF, and even the recently-formed Unity SFB, may not get any relief. However, Unity SFB, which is a venture between BharatPe and Centrum, could have different terms, given the potential acquisition of beleaguered PMC Bank.

Small finance banks can now list within eight years from the date of commencement of operations against the earlier condition of within three years of reaching a net worth of Rs 5 billion, and against the demand for 10 years. For universal banks, the listing requirement remains the same, that is after six years of commencement of operations.



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