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Nabard may covert its NBFC into a small bank

Nabard is planning to convert its subsidiary Nabard Financial Services into a ‘small finance bank’ under the proposed differentiated banks, initiated by RBI provided such a set-up allowes all-India operation for the bank. The RBI is expected to issue final guidelines for differentiated banks by the end of this month. Nabard owns 68% stake in the Bengaluru-headquartered Nabfins. The balance stake is held by the Karnataka government, Canara Bank, Union Bank of India, Bank of Baroda, Dhanalakshmi Bank and Federal Bank. Harsh Bhanwala, chairman, Nabard said once the guideline (on small finance banks) comes out, Nabard will take a close look at it and consider it as an option. He said Nabfin, which is a non-banking finance company, was created with the sole objective of telling the MFI (microfinance institution) sector that it can also lend at reasonable rates of interest. Nabfin currently operates in four States – Karnataka, Tamil Nadu, Andhra Pradesh, and Maharashtra.

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