RBI To Issue Final Guidelines For Small Banks By Month-end

Reserve Bank of India (RBI) Governor Raghuram Rajan has said that the central bank will issue final guidelines for small banks, which will cater to small businesses and low income groups, by the end of this month. Then, it will invite applications for setting up of these banks.

He added that supermarket chains and post offices can also apply for these licences. “One of the suggestions was that instead of having local area banks which are focussed on two or three districts, we should allow for the possibility of all India small finance banks. But the key is that these should be focused on small lending,” Rajan said.

The RBI Governor also cautioned against repeated loan waivers by various state governments, saying that such measures disrupt credit pricing and credit market. "There should be a reasonable ceiling on interest rate on loans from micro-finance lenders for consumer protection," he said.