Guidelines To Set Up Small Finance Banks Soon: Rajan

Reserve Bank of India (RBI) Governor Raghuram Rajan has said that the guidelines for setting up small finance banks for small customers will be issued in a few weeks. He was speaking at an awards function organised by the Institute for Development and Research in Banking Technology.

Talking about the role of communication and mobile technologies in growth and expansion of services, he said, “We have tried very hard to get banks co-operate with mobile companies. But the transactions are still very low.”

“That is why we have progressed on putting out guidelines for payment banks... to allow mobile companies and perhaps some software companies and perhaps some retail houses to enter into the business of payment banking,” he said.

To sustain business, these payment banks should have back-end tie-ups with the regular commercial banks, working as banking correspondents for them. “To my mind, a viable model would be a payment bank which essentially allows the access throughout the country, but at the bank’s end (it should have) a tie-up with a regular commercial bank so that it can offer services over and beyond the payment bank,” Rajan said.