The Reserve Bank of India (RBI) said on May 17 that it had found six applicants not suitable to be given licences to run universal banks and small finance banks, or SFBs.
RBI said those found not suitable for universal bank permits were UAE Exchange and Financial Services Limited, the Repatriates Cooperative Finance and Development Bank Limited (REPCO Bank), Chaitanya India Fin Credit Private Limited, and Pankaj Vaish and others.
The applicants not found suitable for SFB permits were VSoft Technologies Private Limited and Calicut City Service Co-operative Bank Limited.
RBI had received 11 applications to set up banks under the guidelines for ‘on tap’ licensing of universal banks and small finance banks. The remaining applications are under examination, RBI said.
What is the background of the six entities whose applications have been rejected by the RBI? Here's what Moneycontrol found.
- Chaitanya India Fin Credit
Starting microfinance operations as an NGO, Chaitanya secured a non-banking financial company, or NBFC, licence from RBI in October 2009. It has primarily focussed on small business loans, livestock loans and joint liability group loans. Flipkart co-founder Sachin Bansal is the CEO. He acquired a majority stake in Chaitanya in September 2019 with an investment commitment of Rs 739 crore. The company has in the past publicly stated its intentions to start a bank.
- UAE Exchange and Financial Services
The company is a public limited company licensed by RBI as an NBFC. It offers money transfer and foreign exchange services, ticketing and tours (domestic and international), gold, vehicle and consumer loans, insurance, share trading, and other investment advisory services. Its parent company is Finablr, a financial services holding company that listed on the London Stock Exchange; its shares are suspended from trading.
- REPCO Bank
REPCO Bank was registered in November 1969 as a Cooperative Society under the Madras Cooperative Societies Act, 1961. It was established with the purpose of promoting the rehabilitation of repatriates from neighbouring countries, mainly from Sri Lanka and Burma, now known as Myanmar. E. Santhanam is the chairman of REOCO Bank, which is awaiting a clarification from RBI on the exact reasons for the rejection of its applicatio. "We are examining whether we should send an appeal to the RBI for reconsideration of our universal bank license as we are a traditional bank with a base of over Rs 16,000 crore," REPCO Bank General Manager Vaidyanathan told Moneycontrol on May 18.
- VSoft Technologies
Founded in 1996 in Atlanta, Georgia, the company is a provider of banking and payment solutions to financial institutions of all sizes worldwide. In 2004, the company started its Indian arm with the aim of catering to Indian banks and other financial institutions, providing technology products and platform-based business process outsourcing services in the core banking and payments domain. Murthy Veeraghanta is Chairman and CEO of the Indian arm. Currently, the company serves clients ranging from cooperative banks to large global financial institutions.
- Calicut City Service Co-operative Bank
Founded in July 2002, the cooperative bank currently has 26 branches in the city of Calicut in Kerala. G Narayanan Kutty is the chairman of the organisation. It runs mobile branches in Calicut and has also invested in some agro-based projects.
- Pankaj Vaish
Vaish is a veteran of the banking business, having served both in India and abroad. Vaish served as Citibank’s head of markets in India, Bangladesh and Sri Lanka, with responsibilities for the fixed income, currencies, credit, commodities and equities businesses. He applied to the RBI for a banking permit at a time when Citibank is exiting its consumer business, including in India, citing a lack of scale and profitability.