The Reserve Bank will soon invite applications for small finance banks that would provide basic products like credit but in a limited area.
"In the next few weeks, we will put out guidelines inviting applications for what we call small finance banks. These are banks that will cater to smaller customers across the country. The detailed guidelines will also be put out," RBI Governor Raghuram Rajan said today.
He was speaking at the 10th IDRBT Banking Technology Excellence Awards here.
Referring to payment banks, he said they should tie-up with regular commercial banks to offer different services. "My hope is that by licencing payment banks, we would also further cause of bank payments, bank alliances."
Meanwhile in New Delhi, Financial Services Secretary G S Sandhu, too, said the Reserve Bank will shortly invite applications for issuance of licences in three categories -- small banks, payment banks and universal banks -- to achieve financial inclusion target.
"Reserve Bank will shortly invite fresh applications to grant licence in three categories such as small banks, payment bank and universal bank to fulfil objectives of the government," he said at a PHDCCI meet here.
Sandhu said preparations were afoot to invite fresh applications for opening up of banks in the identified categories. The first priority of the government, he added, would be for smaller banks.
Highlighting that technology has an important role to play in financial inclusion, Rajan said certain 'Ps', including Products, Price and Protection summarise the aspects which need to be pondered over by bankers.
In this context, he said Products that are shaped to the needs of individuals, without taxing their understanding are needed.
The RBI has put out a consumer code which puts the onus on banks to determine what is suitable for individuals, Rajan said.
"Of course, that's a harder task than just selling the product to the individual. We have to find out what the individual understands, what the needs are, etc."
Technology may help in understanding customer profiles better and to inform the customer better, the Governor said.