i nc lu s i ve f i nanc i ng
129
•
Extending SHGs to urban areas.
•
Taking up the JLG model to purvey credit to mid-
segment clients such as small farmers, marginal
farmers, tenant farmers.
The report stopped short of prescribing any definite
role for SHGs in financial inclusion. However, the com-
mittee, just as its successors, envisioned a larger role for
MFIs, particularly for-profit MFIs in financial inclu-
sion. For instance, it proposed some concrete measures
to bring them under regulation as a separate category
of non banking companies. Once regulated, they could
also be recognized as BCs of banks for providing sav-
ings, remittance services and micro insurance. The pro-
posal to create NBFC-MFIs was later endorsed by both
Raghuram Rajan and Malegam (2011) Committees and
implemented by the RBI in 2011.
As for recognizing them as BCs the central bank has
been hesitant in view of the conflict of interest between
the BC and NBFC operations and the possible risks of
co-mingling or mingling of deposits collected for the
bank with the loan funds of the company (RBI, 2010).
Mor Committee argued that ‘with technology enabling
intra-day claring of funds it is not obvious that this
(i.e., co-mingling risk) is anymore a risk factors that
cannot be managed by a bank. Regulation should permit
ND-NBFCs to be BCs for national banks where they
can take deposits on behalf of the national bank and
offer credit from their own balance sheet or in risk-
sharing partnerships with that bank or any other bank.
ND-NBFCs have a vast reach on the ground and those
that are classified as NBFC-MFIs in particular are able
to access customers well beyond the reach of the bank
branches. BC partnerships between banks and such
NBFCs could prove to be very valuable’ (p. 67). The
Monetary Policy Statement 2014–15 (April) indicated
that these suggestions were under serious consideration
by the regulator and in June 2014 came the revised
guidelines allowing banks to engage non-deposit taking
NBFCs as BCs.
A close reading of the developments in the regulatory
sphere of microfinance helps one see how the for-profit
B
OX
5.3
Suggested Changes by the Stakeholders in the Draft Guidelines for Payments Banks
• Application of the criterion of minimum (not ‘at least’) track record/experience of five years for the promoter company in cases
where the BCs/ PPIs qualify other fit and proper criteria and their promoter companies have a sound background and vintage
of over 5 years.
• Term deposits and recurring deposits should also be allowed to be offered by the payments bank as the target clients need them.
• Instead of restricting payments banks to hold a maximum balance of Rs. 100,000 per customer, they may be allowed to hold
a minimum percentage of accounts with balance up to Rs. 1 lakh; this may allow
all
members of a community including the
affluent minority to be part of the formal financial institution and increases the viability of the payments banks.
• Both inward and outward remittances (international cross border and domestic) should be allowed to be offered by payments
banks.
• Payments Bank may also be allowed to offer other financial services such as micro insurance, pension, mutual funds as corporate
agents/aggregators.
• A lower capital and net worth requirement of Rs. 50 crore be considered, in line with the recommendation by the CCFS
Committee considering the CRR and SLR requirements, the time lag involved in turning profitable and limited requirement
to make upfront capital investment in technology.
• The timeframe for dilution to 40 per cent shareholding be brought up to seven years (from the proposed 3 years) in the light
of the imminent difficulties of a nascent business model to attract diversified investments. For the same reason non-promoter
entities may be allowed to have shareholding of up to 26 per cent of the voting equity capital of the bank.
• Promoters should be allowed voting rights equivalent to that of their shareholding.
Source
: Adapted from the ‘Recommendations on Draft Guidelines for Licensing of “Payment Banks”’, Submitted to the Reserve
Bank of India under Poorest States Inclusive Growth (PSIG) Programme, on 28 August 2014 based on the Roundtable organized
by ACCESS-ASSIST on 20 August 2014 in Mumbai.
