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SFB allowed to offer more forex products

August 09, 2022

SFB allowed to offer more forex products
Small finance banks will now be able to offer a wide range of forex products to their customers. In a move to provide flexibility to small finance banks the Reserve Bank has allowed small finance banks which have completed two years of operations of as Category-II Authorised Dealer to do Category-I Authorised Dealer business, subject to compliance of certain norms.

“With the objective of giving more flexibility to SFBs to meet their customers’ foreign exchange business requirement, it has been decided that all the scheduled SFBs, after completion of at least two years of operations as Authorised Dealer Category-II, will be eligible for Authorised Dealer Category-I license, subject to compliance with prescribed eligibility norms” said a notification issued by RBI.

As a Category-I authorised dealer, the small finance bank will be allowed to deal in all other transactions in foreign exchange like bill of exchange, cheques, letters of credit, deposits, etc. While as a Category-II Authorised dealer the bank is allowed to offer only money changing facilities.

The eligibity criteria includes among others that the small finance bank should have a minimum net worth of ₹500 crore. Its CRAR should not be less than 15%. The net NPAs of the bank should not exceed 6%, during previous four quarters. It should not have defaulted in maintenance of CRR/ SLR during previous two years.

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