On Thursday, Raghuram Rajan the RBI Governor has declared that Reserve Bank of India (RBI) will provide licenses to all the small finance banks which will be operating from next month onwards.

RBI along with Reliance Industries Ltd, Department of Posts, Cholamandalam Distribution Services Ltd, and Aditya Birla Nuvo Ltd on Wednesday set the goal and issued “in principle” approval to 11 applicants to set up the payment banks. The other companies who received the approval are as follows- Airtel M Commerce Services Ltd, Fino Pay Tech Ltd, National Securieties Depository Ltd, Dilip Shantilal Shanghir, Vijay Shekhar Sharma, Tech Mahindra Ltd, and Vodaphone m-pesa Ltd. Reliance Industries has tie up with SBI as they both are equal partner with 30 percent stoke in the payment venture.

According to Rajan, small finance banks and payment banks would help to expand the huge financial inclusion. Small finance banks are similar to the universal bank but it would be operating only on the small scale and not on the large scale. Rajan said in a conference which was organized by the State Bank of India that, the new entities of small finance banks and payment banks are not threats to existing banks.

Months ago, Rajan declared that the Indian Banking Sector was set to see the whole change under two years with several new institutions and existing banks and the new institutions like small finance banks and payment banks would bring into the market. For payment banks the Reserve Bank of India received 41 applications and small banks it has received 72 applications.