The Reserve Bank of India (RBI) announced the rejection of applications from Dvara Kshetriya Gramin Financial Services Private Limited and Tally Solutions Private Limited for setting up small finance banks. The decision was revealed in a press release issued by the central bank on April 12, 2024.
Under the guidelines for ‘on tap’ licensing of small finance banks, the RBI examined the applications submitted by the two companies and deemed them unsuitable for granting in-principle approval to establish small finance banks. The assessment process followed a set procedure outlined in the current guidelines.
The central bank has been processing applications to set up banks under the guidelines for ‘on tap’ licensing of universal banks and small finance banks. Since 2021, the RBI has received a total of 13 applications. The names of the applicants were previously announced in press releases on April 15 and August 30, 2021, December 31, 2021, January 4, 2023, and January 8, 2024.
Decisions on nine of the applications have been announced earlier, with updates released on May 17, 2022, and July 4, 2023. These decisions involved applications from both universal banks and small finance banks.
In the most recent update, the central bank rejected the applications from Dvara Kshetriya Gramin Financial Services and Tally Solutions. The reasons for the rejections were not specified in the press release, and the RBI’s decision may be based on various factors, including the suitability and viability of the applicants’ proposals.
Two more applications for setting up small finance banks are still under examination, and their outcomes are yet to be announced.
Yogesh Dayal, the Chief General Manager at the RBI, shared the press release under reference number 2024-2025/90.
The RBI’s decision to reject these applications signifies the importance of a stringent selection process for setting up small finance banks in the country. The move aims to maintain stability in the banking sector and ensure that only the most qualified entities are given the opportunity to provide essential financial services to underserved and unbanked segments of the population.
The central bank’s commitment to stringent evaluation helps safeguard the integrity of the financial system and ensures the sustainability and effectiveness of new banking institutions entering the market.
Press Release: 2024-2025/90 by RBI