A roadmap has been prepared by RBI for the voluntary transformation of small finance banks into universal banks.
This roadmap for the voluntary transition of small finance banks (SFBs) to universal banks provided criteria, including net worth and NPA ratios.
As part of the roadmap, RBI has prescribed criteria like minimum net worth of ₹1,000 crore and net profit in the last two financial years.
Other criteria include a low non-performing asset (NPA) ratio and a diversified loan portfolio.
Based on the six specified eligibility requirements, the majority of the ten applicants might not be prepared to switch to a universal bank until the following year.
This is due to their inability to fulfill the gross non-performing assets (NPA) and net non-performing assets (NPPA) thresholds of less than or equal to 3% and 1%, respectively, for the previous two fiscal years.
In 2015, these applicants received “in-principle” approval to establish SFBs.
According to RBI guidelines, SFBs wishing to become universal banks must be listed on an established stock exchange (North East Small Finance Bank is the only one of the 10 SFBs that is not listed).
