RBI revamps advisory panel to fast-track new bank licenses, signals fresh momentum in financial inclusion

The Reserve Bank of India (RBI) has announced the formation of a new Standing External Advisory Committee (SEAC) to evaluate applications for Universal Banks and Small Finance Banks. The committee, with a tenure of three years, was established as per a statement issued by the central bank on January 20.

The SEAC will be chaired by M. K. Jain, former Deputy Governor of the RBI. Other prominent members include Revathy Iyer, a director on the RBI’s Central Board; Parvathy V. Sundaram, former Executive Director of the RBI; Hemant G. Contractor, ex-Managing Director of the State Bank of India and former Chairman of the Pension Fund Regulatory and Development Authority (PFRDA); and N. S. Kannan, former Managing Director and CEO of ICICI Prudential Life Insurance. The RBI’s Department of Regulation will provide secretarial support to the committee.

The process for granting licenses involves two stages: an initial screening by the RBI to verify compliance with licensing guidelines, followed by a detailed evaluation by the SEAC. The SEAC was last constituted in March 2021 under the chairpersonship of Shyamala Gopinath, a former RBI Deputy Governor. Both Revathy Iyer and Hemant G. Contractor were part of that earlier committee.

Currently, Annapurna Finance and AU Small Finance Bank have applied for universal banking licenses, while Fino Payments Bank and VFS Capital have submitted applications for Small Finance Bank licenses. These applications remain under review by the regulator.

This revamped SEAC underscores the RBI’s ongoing efforts to maintain a robust and transparent licensing process for fostering financial inclusion and promoting competition in India’s banking sector.