NEW DELHI: The government’s policy think tank Niti Aayog has backed introducing a restricted digital business bank licence and a restricted digital consumer bank licence, a step aimed at deepening financial inclusion using technology.
“The report makes a case, and offers a template and road map for a digital bank licensing and regulatory framework in India,” according to the report ‘Digital Banks: A Proposal For Licensing And Regulatory Regime For India. ’
It said that an applicant acquiring a restricted licence should enlist in the regulatory sandbox and commence operations as a digital business bank/ digital consumer bank as the case may be, in the sandbox. The RBI’s regulatory sandbox framework recognises the need to offer relaxations (including financial soundness, track record and adjacent issues) to entities enlisted in the sandbox to facilitate experimentation.
The RBI and the applicant should identify a set of metrics for which the licensee will be progressively monitored, the report said, adding that such metrics could be around cost to acquire a customer, volume, value of credit disbursed to MSMEs, technological preparedness and compliance levels of the licensee across prudential aspects, among other things.
In the restricted phase, digital business banks may be required to bring in Rs 20 crore of minimum paid-up capital. Upon progression from the sandbox a full-scale digital business bank will be required to bring in Rs 200 crore (equivalent to that required of the small finance bank). “The report highlights the promise that fullstack digital banks hold as a potential solution for the persistent policy challenge of credit deepening. It is the next stage of financial inclusion,” said Niti Aayog vice chairman Suman Bery.