New Delhi: A discussion paper released by a government think-tank Niti Aayog full-stack idea digital Banks to deepen banking services and bridge the credit gap across the country, leveraging technology and the massive digitization achieved so far.
The paper states that these entities will issue deposits, give loans and offer the full suite of services that the Banking Regulation Act empowers them. As the name suggests, however, digital banks (DBs) will primarily rely on the Internet and other contiguous channels to deliver their services, and not on physical branches.
“However, as a natural consequence of being a ‘bank’ in the fullest sense of its legal definition, it is proposed that DBs will be subject to the same prudential and liquidity norms as existing commercial banks. A new licensing/regulatory framework will be created. is proposed as regulatory innovation and not as regulatory arbitrage,” the paper said.
It said reports indicate that the RBI is looking at setting up a working group to regulate “front-end only” neo banks that are currently operating in a partnership model. The paper added that a useful point for consideration would be to evaluate “full-stack” DB licenses, which provide greater regulatory control and further deepen the under-banked Indian market, rather than a piecemeal approach . “The success that India has seen on the retail payments and credit front has failed to replicate the payment and credit needs of its small businesses. Effectively leverage technology to bridge the current credit gap and trade and policy barriers. NITI Aayog CEO Amitabh Kant said to address the needs of this segment and bring them under the formal financial ambit.
It recommended a two-stage approach as part of the regulatory template. “Given the critical role of credit in the growth of the economy and the need for public policy to bridge the 25-trillion (25-lakh-crore) credit gap in the MSME sector, it is recommended that digital business bank licenses be phased out. Go- in Phase 1. RBI may consider introducing ‘Digital Universal Bank’ license in Phase 2 based on regulatory experience gathered in Phase 1.
It recommended that in the restricted phase, a digital business bank may be required to bring in a minimum paid-up capital of Rs 20 crore. Moving from the sandbox to the final stage, a full-stack digital business bank would need to bring in Rs 200 crore (equivalent to small finance banks).
It said that in view of the “digital-native” nature of the banks operating under this licence, the license may require one or more controlling persons of the applicant entity, whose e-commerce, payments, such as Must have an established track record across industries. Technology (eg, cloud computing). As with other licenses (eg, payments bank, NUE), applicants may have the option of applying to a union. Existing Neo Banks looking to upgrade or small finance banks / other regulated entities (for example, existing existing banks that may see opportunities in full-stack digital business bank licenses) are also potentially eligible candidates to apply.
“Creating a blueprint for the digital banking regulatory framework and policy provides an opportunity for India to consolidate its position as a global leader. fintech As well as solving the many public policy challenges it faces,” the paper added.
The paper states that these entities will issue deposits, give loans and offer the full suite of services that the Banking Regulation Act empowers them. As the name suggests, however, digital banks (DBs) will primarily rely on the Internet and other contiguous channels to deliver their services, and not on physical branches.
“However, as a natural consequence of being a ‘bank’ in the fullest sense of its legal definition, it is proposed that DBs will be subject to the same prudential and liquidity norms as existing commercial banks. A new licensing/regulatory framework will be created. is proposed as regulatory innovation and not as regulatory arbitrage,” the paper said.
It said reports indicate that the RBI is looking at setting up a working group to regulate “front-end only” neo banks that are currently operating in a partnership model. The paper added that a useful point for consideration would be to evaluate “full-stack” DB licenses, which provide greater regulatory control and further deepen the under-banked Indian market, rather than a piecemeal approach . “The success that India has seen on the retail payments and credit front has failed to replicate the payment and credit needs of its small businesses. Effectively leverage technology to bridge the current credit gap and trade and policy barriers. NITI Aayog CEO Amitabh Kant said to address the needs of this segment and bring them under the formal financial ambit.
It recommended a two-stage approach as part of the regulatory template. “Given the critical role of credit in the growth of the economy and the need for public policy to bridge the 25-trillion (25-lakh-crore) credit gap in the MSME sector, it is recommended that digital business bank licenses be phased out. Go- in Phase 1. RBI may consider introducing ‘Digital Universal Bank’ license in Phase 2 based on regulatory experience gathered in Phase 1.
It recommended that in the restricted phase, a digital business bank may be required to bring in a minimum paid-up capital of Rs 20 crore. Moving from the sandbox to the final stage, a full-stack digital business bank would need to bring in Rs 200 crore (equivalent to small finance banks).
It said that in view of the “digital-native” nature of the banks operating under this licence, the license may require one or more controlling persons of the applicant entity, whose e-commerce, payments, such as Must have an established track record across industries. Technology (eg, cloud computing). As with other licenses (eg, payments bank, NUE), applicants may have the option of applying to a union. Existing Neo Banks looking to upgrade or small finance banks / other regulated entities (for example, existing existing banks that may see opportunities in full-stack digital business bank licenses) are also potentially eligible candidates to apply.
“Creating a blueprint for the digital banking regulatory framework and policy provides an opportunity for India to consolidate its position as a global leader. fintech As well as solving the many public policy challenges it faces,” the paper added.
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