RBI Guidelines for SFBs Transitioning to Universal Banks

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The Reserve Bank of India (RBI) has issued guidelines for Small Finance Banks (SFBs) seeking to transition into Universal Banks, providing a pathway for conversion. This voluntary conversion is subject to specific criteria laid out by the RBI.

Eligibility Criteria

To be eligible for conversion, SFBs must have a minimum net worth of Rs 1,000 crore, a satisfactory performance track record of at least five years, and listed status. They should also maintain a gross non-performing asset (NPA) of 3% or less and a net NPA of 1% or less in the past two financial years. Additionally, they must have reported a net profit in the same period and meet prescribed capital adequacy norms.

Application Process

Interested SFBs must provide a detailed rationale for their desire to convert into universal banks. Preference will be given to those with a diversified loan portfolio. The application will be assessed in accordance with RBI guidelines and directives.

Regulatory Compliance

Upon transition, the bank will be subjected to all norms, including the Non-Operative Financial Holding Company (NOFHC) structure, as per RBI guidelines.

Piyush Shukla