India's first small finance bank launched

 

 Capital Small Finance Bank, India's first small finance bank, was launched.

Capital Small Finance Bank opens 10 branches in Punjab; to add nine more in FY17.

• The Jalandhar-headquartered bank had been operating as Capital Local Area Bank since January 2000 with 47 branches in five districts of Punjab.

It is among the 10 entities that were given the in-principle approval by the Reserve Bank of India (RBI) to set up small finance banks.

Guidelines to be met by small finance banks:

•   75 % of Adjusted Net Bank Credit to be extended to priority sector - 50 % of loan portfolio to constitute loans & advances of upto Rs 25 lakh .
•  25 branches must be in unbanked rural areas .
•  Maximum loan size & investment limit to single obligor restricted to 10 percent of capital funds.
•  Maximum loan size & investment limit to a group restricted to 10 percent of capital funds .
•  Require minimum paid up equity capital of Rs 100 crore. 
•  Promoter stake must be at 40 percent in first 5 years.
•  Promoter stake to be brought down to 30 percent within 10 yrs, 26 percent  in 12 years .
•  Listing mandatory within 3 years of reaching Rs. 500 crore net worth .
•  Maximum foreign shareholding of 74 percent allowed .
•  CRR, SLR requirement as applicable to existing commercial banks from Day 1