The RBI has said that it will announce small finance bank licenses next month, media reported.
As per reports, the RBI has received 72 applications for small finance bank licenses and 41 applications for payment bank licenses.
The small finance banks can provide basic banking services like accepting deposits and lending to the unbanked sections such as small farmers, micro business enterprises, micro and small industries and unorganised sector entities.
Commenting on the issue, RBI Governor Raghuram Rajan told the media, "New payments banks would not pose any competitive threat to the existing banks and these new entities would rather serve as 'feeder' for the universal banks."
"Introduction of Payments Banks will revolutionise banking, make it very exciting for customers and existing lenders will have to improve service to retain depositors," he added.
As per reports, the payment banks will be allowed to provide payments and remittance services, but will not issue credit cards or accept deposits beyond Rs 1 lakh. They can issue ATM and debit cards and also distribute mutual fund and insurance products.