The Reserve Bank of India (RBI) announced on Friday a set of requirements that small lenders must meet, including performance indicators and market listing, in order to become a universal bank and provide full services to both retail and corporate clients.

The Reserve Bank of India (RBI) stated that the criteria include a five-year track record of satisfactory performance, a net value of 10 billion rupees, compliance with capital requirements, recent profitability, and few non-performing assets.

Existing promoters can continue with no new additions, and authorised shareholding plans will be maintained, while diverse loan portfolios are preferred, according to the central bank.

Small financing banks have limited customer bases and are unable to provide significant loans. Additionally, they are unable to form subsidiaries.

Eligible small finance banks will be required to offer a comprehensive reason for the shift, and their applications will be evaluated in accordance with established rules, including those for on-tap licencing and shareholding directives.