RBI may allow small finance banks to sell holdings fully after 5 years

The RBI may give allowance to promoters of small finance banks to offload their holding fully after five years of operation even as it is readying draft guidelines for offering fresh licenses to aspiring small-finance lenders, according to the sources. The RBI may issue the draft guidelines in this regard soon. The new draft is likely to address discrepancies related to the holding company structure for small finance banks along with the listing issues.

RBI accorded in-principle approval to 10 entities for entering the small-finance banking space in September 2015. Seven of these, including Equitas, Ujjivan and Utkarsh, follow a holding company structure, while AU Small Finance Bank, Capital Small Finance Bank and Suryoday Small Finance Bank are among the exceptions. Giving allowance to promoters to totally exit would clear the way for reverse merger of the holding companies into the bank promoted by these firms.