Purple Finance Aims for Small Finance Bank Licence by 2028
Why in the news
Purple Finance, a young NBFC, wants to convert into a small finance bank by 2028, a handy peg to revise RBI’s SFB licensing rules.
Key facts
- Purple Finance: founded 2021 by four entrepreneurs; net worth above ₹100 crore; 44 branches in seven states.
- Rulebook: RBI’s 2019 licensing guidelines for private-sector small finance banks, issued under the Banking Regulation Act, 1949.
- Aim of SFBs: financial inclusion for small businesses, marginal farmers, micro and small industries and the unorganised sector.
Who can apply
- Resident professionals with 10 years of banking and finance experience; resident-owned companies or societies.
- Existing NBFCs, MFIs and Local Area Banks.
- No joint ventures; one promoter group; fit and proper test.
Capital and shareholding
| Item | Requirement |
|---|---|
| Paid-up capital | ₹200 crore (raised from ₹100 crore) |
| Promoter stake | 40% for 5 years; 30% in 10 years; 26% in 12 years |
| Other shareholders | None above 10% |
Operations
- Deposits, small loans, forex, mutual fund distribution and insurance (with RBI approval); no subsidiaries for non-banking financial services.
- CRR and SLR apply; PSL 60% of ANBC.
- Caps: 10% of loans to one borrower; 15% of capital funds to a connected group.
- 25% of branches in unbanked rural centres.
- Public limited company under the Companies Act, 2013; listing within 3 years of ₹500 crore net worth.
- NBFCs also need a transition plan; RBI does on-site and off-site due diligence.
Exam angle
- SFB PSL target: 60% of ANBC.
- Promoter stake path: 40%, then 26% by year 12.