RBI rejects Sachin Bansal-backed firm’s application for setting up 5 others

The Reserve Bank has rejected the application of Chaitanya India Fin Credit Pvt.

The RBI said in a statement that the examination of six applications has now been completed as per the procedure laid down under the guidelines.

“Based on the evaluation of applications, (six) applicants were not found eligible for policy approval for setting up a bank,” it said.

Applicants disqualified under Universal Banks’ ‘On-Tap’ License Guidelines are: UAE Exchange and Financial Services Limited; The Repatriates Cooperative Finance and Development Bank Limited (REPCO Bank); Chaitanya India Fin Credit Pvt. Ltd., and Pankaj Baish and others, it said.

Sachin Bonsal, co-founder of e-commerce company Flipkart, bought a majority stake in Chaitanya in September 2019 with an investment promise of Rs 739 crore. Managing Director and CEO of Bhansal Chaitanya. Bansal sold Flipkart to Walmart.

The RBI further stated that the applicants did not find suitable under the guidelines for “on-tap” licensing of small financial banks: VSoft Technologies Private Limited and Calicut City Service Co-operative Bank Limited.

The Reserve Bank received 11 applications for setting up banks under the ‘On-Tap’ Licensing Guidelines of Universal Bank and Small Finance Banks.
The rest of the applications are under examination, the central bank added.

The remaining five applications are for setting up small financial banks. West and Housing Finance Ltd., Akhil Kumar Gupta, by Regional Grameen Financial Services Pvt. Ltd., Cosmia Financial Holdings Pvt. Ltd., and Tally Solutions Pvt. Ltd. are among the applicants.

Guidelines for ‘On Tap’ Licensing of Private Banks and SFBs in the Private Sector were issued on August 1, 2016 and December 5, 2019, respectively.

According to the guidelines, the initial minimum paid-up voting equity capital for a public sector bank should be Rs 500 crore. After that, the bank should always have a minimum assets of Rs 500 crore. The minimum paid up capital / net worth for SFB should be Rs.200 crore.

In the case of urban co-operative banks willing to voluntarily transfer to SFB, the initial requirement of net worth is Rs.100 crore, which needs to be increased to Rs.200 crore within five years.