Source: ET
Context:
VFS Capital has withdrawn its application for a small finance bank (SFB) licence in India. The Reserve Bank of India had earlier received the application under the on-tap licensing guidelines for private sector small finance banks.
About VFS Capital:
- Type: NBFC-MFI (Non-Banking Financial Company–Microfinance Institution)
- Headquarters: Kolkata, West Bengal
- Founded: 1995
- Business Focus: Provides microcredit to women entrepreneurs and small businesses across rural and semi-urban areas in India.
- Presence: Operates in 13+ states with a strong microfinance portfolio.
About Small Finance Banks (SFBs):
- SFBs are niche banks set up to further financial inclusion by providing savings and credit facilities to small businesses, marginal farmers, micro and small industries, and unorganized sector entities.
- Regulatory Authority: Reserve Bank of India (RBI).
- Key Features:
- Must be registered as a public limited company under the Companies Act, 2013.
- Minimum paid-up capital: ₹200 crore.
- Must maintain 75% of Adjusted Net Bank Credit (ANBC) for priority sector lending.
- At least 50% of loans should be up to ₹25 lakh.
About RBI’s On-Tap Licensing Guidelines:
- Introduced: December 2019
- Allows eligible entities to apply for an SFB licence at any time (unlike earlier batch-based processes).
- Eligible applicants include:
- Existing NBFCs, MFIs, and Local Area Banks (LABs).
- Promoters should have at least 10 years of experience in banking or finance.
