With the purpose of furthering financial inclusion, the Reserve Bank of India today issued draft guidelines for setting up 'local feel' small banks, which will disburse small-ticket loans to farmers and businesses. The Reserve Bank also issued draft guidelines for setting up of payment banks, which will cater to the marginalised sections of society, including migrant labourers, for collecting deposits and remitting funds. According to the RBI's guidelines, such banks can be set up with a minimum capital of 100 crore rupees, compared to 500 crore rupees required for normal commercial banks. The proposed small banks will provide a whole suite of basic banking products, such as deposits and supply of credit, but in a limited area of operation. Payments banks will offer a limited range of products, but will have a widespread network of access points, particularly in remote areas, either through their own branch network, or through networks provided by others.

In his Budget speech on July 10, Finance Minister Arun Jaitley had said the RBI will create a framework for licensing small banks and other differentiated banks.