Home   »   RBI Guidelines for SFBs Transitioning to...

RBI Guidelines for SFBs Transitioning to Universal Banks

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.

RBI Guidelines for SFBs Transitioning to Universal Banks_4.1

TOPICS: