RBI Sets Up New Committee To Review Bank Licensing Applications

The Reserve Bank of India (RBI) announced the formation of a new standing external advisory committee on Monday. This committee will evaluate applications for Universal Banks and Small Finance Banks (SFBs). It will be chaired by former RBI Deputy Governor M K Jain and includes five other members.

The committee members are Revathy Iyer, Director on the central board of RBI; Parvathy V Sundaram, former Executive Director at RBI; Hemant G Contractor, Ex-Managing Director of the State Bank of India and Former Chairman of the Pension Fund Regulatory and Development Authority; and N. S. Kannan, former MD & CEO of ICICI Prudential Life Insurance. This committee will serve for a period of three years.

The previous Standing External Advisory Committee (SEAC) was formed in March 2021, and chaired by Shyamala Gopinath, a former RBI Deputy Governor. Also, both Revathy Iyer and Hemant G Contractor, who currently serve on the newly formed committee, were also members of the previous one.

According to the RBI, the committee will be supported by the central bank’s Department of Regulation, providing secretarial assistance.

Under the RBI’s licensing guidelines, applications for Universal Banks and Small Finance Banks undergo an initial screening to ensure the basic eligibility of the applicants. These applications are then reviewed by the advisory committee, composed of professionals with substantial experience in banking, finance, and related sectors.

The committee will not review applications from Small Finance Banks that have already applied for or intend to apply for a Universal Bank license, as their eligibility was assessed when they were initially granted the Small Finance Bank license.

Currently, the RBI is reviewing applications from Annapurna Finance and AU Small Finance Bank (AU SFB) for a Universal Bank license as well as applications from Fino Payments Bank and VFS Capital for a Small Finance Bank license.

By forming this new advisory group, the RBI hopes to improve the Indian banking industry as a whole and ensure a comprehensive, open, and unbiased application evaluation process.

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