The RBI has ignored some large companies by giving small finance bank licences to eight small microfinance companies, which shows that the focus of the regulator is to meet the banking needs at the bottom of the pyramid through players focussed at the local level. The RBI has issued total 23 new bank licences over the last two years with the intention of issuing on-tap banking licences as well; thus, competition in the industry will heat up especially for low-cost deposits. Moreover, the fact that a large number of microfinance companies received a licence could pose problems for microfinance companies like SKS which did not receive a banking licence. If these small finance banks succeed in meeting the banking needs at the bottom of the pyramid.
