The Reserve Bank of India (RBI) has formed a Standing External Advisory Committee (SEAC) to evaluate applications for Universal Banks and Small Finance Banks (SFBs). This initiative marks a significant step in streamlining the licensing process for financial institutions. The SEAC will function for a tenure of three years and will receive secretarial support from the RBI’s Department of Regulation, according to an official statement from the central bank.
Composition of the SEAC
The newly formed SEAC will be chaired by MK Jain, former Deputy Governor of the Reserve Bank of India, and will consist of five distinguished members with extensive experience in banking and finance:
- Revathy Iyer: Director, Central Board, Reserve Bank of India
- Parvathy V Sundaram: Former Executive Director, Reserve Bank of India
- Hemant G Contractor: Former MD, State Bank of India and former Chairman, Pension Fund Regulatory and Development Authority (PFRDA)
- NS Kannan: Former MD & CEO, ICICI Prudential Life Insurance Co Ltd
Role and Responsibilities
The SEAC is tasked with evaluating applications for bank licenses after an initial screening by the RBI. The licensing guidelines require applicants to meet prima facie eligibility criteria before being referred to the SEAC for further assessment. This structured approach ensures that only well-qualified entities proceed through the process.
The SEAC will rely on the expertise of its members, who bring years of experience from diverse sectors, to ensure a thorough and transparent evaluation of the applications.
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Historical Context
The establishment of the SEAC builds on previous efforts by the RBI to ensure robust governance in bank licensing. A similar advisory committee was announced on March 22, 2021, reflecting the central bank’s ongoing commitment to enhancing India’s banking infrastructure.
Strengthening India’s Banking Ecosystem
The RBI aims to create a transparent framework for evaluating bank licenses by forming the SEAC. This initiative encourages credible players to enter the financial ecosystem. It is expected to promote innovation, enhance competition, and drive financial inclusion.
