{"id":196701,"date":"2026-04-14T20:50:00","date_gmt":"2026-04-14T15:20:00","guid":{"rendered":"https:\/\/www.practicemock.com\/blog\/?p=196701"},"modified":"2026-04-14T12:41:40","modified_gmt":"2026-04-14T07:11:40","slug":"types-of-banking-licences-in-india-2026","status":"publish","type":"post","link":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/","title":{"rendered":"Types of Banking Licences in India \u2014 A Beginner&#8217;s Visual Guide (2026)"},"content":{"rendered":"<div class=\"yoast-breadcrumbs\"><span><span><a href=\"https:\/\/www.practicemock.com\/blog\/\">Home<\/a><\/span> \u00bb <span><a href=\"https:\/\/www.practicemock.com\/blog\/category\/banking-awareness\/\">Banking Awareness<\/a><\/span> \u00bb <span class=\"breadcrumb_last\" aria-current=\"page\">Banking Licences in India 2026<\/span><\/span><\/div>\n\n\n<p>Ever wondered why <strong>India Post Payment Bank<\/strong> can&#8217;t give you a loan, or why <strong>SBI<\/strong> can do almost everything a bank can? The answer lies in the <strong>type of banking licence<\/strong> each of them holds.<\/p>\n\n\n\n<p>For banking exam aspirants preparing for <strong>IBPS PO, SBI PO, IBPS Clerk, RRB PO<\/strong>, and similar exams in 2026, questions on banking licences, their features, and key differences appear regularly. This guide breaks it all down \u2014 simply, visually, and with exam-ready tips you can actually use.<\/p>\n\n\n\n<p>\ud83d\udccb <strong>New to banking exam prep?<\/strong><a href=\"https:\/\/www.practicemock.com\" target=\"_blank\" rel=\"noreferrer noopener\"> <\/a><a href=\"https:\/\/www.practicemock.com\/?ref= 15436\" target=\"_blank\" rel=\"noreferrer noopener\">Sign up FREE on PracticeMock<\/a> and take a topic-wise Banking Awareness mock test right now \u2014 no credit card needed!<\/p>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-vivid-cyan-blue-background-color has-background wp-element-button\" href=\"https:\/\/www.practicemock.com\/?ref= 15436\" target=\"_blank\" rel=\"noreferrer noopener\">Sign up FREE on PracticeMock<\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Who Issues Banking Licences in India?<\/h2>\n\n\n\n<p>All banking licences in India are issued by the <strong>Reserve Bank of India (RBI)<\/strong> under <strong>Section 22 of the Banking Regulation Act, 1949<\/strong>. No entity can carry out banking business in India without an RBI licence.<\/p>\n\n\n\n<p>As of <strong>August 1, 2025<\/strong> (latest official data), India&#8217;s commercial banking sector consists of:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>12<\/strong> Public Sector Banks<\/li>\n\n\n\n<li><strong>21<\/strong> Private Sector Banks<\/li>\n\n\n\n<li><strong>12<\/strong> Small Finance Banks<\/li>\n\n\n\n<li><strong>5<\/strong> Payments Banks (operational)<\/li>\n\n\n\n<li><strong>28<\/strong> Regional Rural Banks (RRBs)<\/li>\n\n\n\n<li><strong>44<\/strong> Foreign Banks<\/li>\n\n\n\n<li><strong>2<\/strong> Local Area Banks<\/li>\n<\/ul>\n\n\n\n<p><strong>\ud83c\udfaf Exam Tip:<\/strong> Total commercial banks = <strong>124 scheduled + 4 non-scheduled = 128<\/strong> as of August 2025. Source: <em>Wikipedia \/ RBI Data, August 2025<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The 7 Types of Banking Licences \u2014 At a Glance<\/h2>\n\n\n\n<p><strong>Universal Bank<\/strong><\/p>\n\n\n\n<p>Full-service licence. Can do everything \u2014 deposits, loans, investments, forex.<\/p>\n\n\n\n<p><strong>Small Finance Bank<\/strong><\/p>\n\n\n\n<p>Deposits + loans. Focused on underserved segments. Can upgrade to universal bank.<\/p>\n\n\n\n<p><strong>Payments Bank<\/strong><\/p>\n\n\n\n<p>Deposits only (max \u20b92 lakh). Payments and remittances. Cannot give loans.<\/p>\n\n\n\n<p><strong>Regional Rural Bank<\/strong><\/p>\n\n\n\n<p>Serves rural areas. Owned by Centre (50%), State (15%), Sponsor Bank (35%).<\/p>\n\n\n\n<p><strong>Co-operative Bank<\/strong><\/p>\n\n\n\n<p>Member-owned. Dual regulated by RBI + Registrar of Cooperative Societies.<\/p>\n\n\n\n<p><strong>Foreign Bank<\/strong><\/p>\n\n\n\n<p>Foreign institutions operating in India via branches or wholly owned subsidiaries.<\/p>\n\n\n\n<p><strong>Local Area Bank<\/strong><\/p>\n\n\n\n<p>Covers 3 contiguous districts only. Only 2 operational as of 2025.<\/p>\n\n\n\n<p>\ud83c\udfaf <strong>Can you answer this?<\/strong> Which type of bank can accept deposits but NOT give loans?<\/p>\n\n\n\n<p>Find out + practise 200+ similar questions on PracticeMock \u2014 India&#8217;s top banking exam prep platform!<\/p>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-vivid-cyan-blue-background-color has-background wp-element-button\" href=\"https:\/\/www.practicemock.com\/?ref= 15435\" target=\"_blank\" rel=\"noreferrer noopener\">\ud83d\udc49 Get Free Access at PracticeMock.com<\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Now Let&#8217;s Understand Each Type in Detail<\/h2>\n\n\n\n<h2 class=\"wp-block-heading\">1. Universal Bank Licence (Updated: 2025 Guidelines)<\/h2>\n\n\n\n<p>A <strong>Universal Bank<\/strong> is the most comprehensive type of banking licence. These banks can do it all \u2014 accept deposits, give home loans, business loans, offer credit cards, conduct forex transactions, and even manage investments.<\/p>\n\n\n\n<p>Examples: <strong>State Bank of India, HDFC Bank, ICICI Bank, Punjab National Bank.<\/strong><\/p>\n\n\n\n<p>The RBI updated the Universal Bank Licensing Guidelines in <strong>2025<\/strong>, making the process more transparent. Key requirements:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Minimum paid-up voting equity capital: <strong>\u20b9500 crore<\/strong> (updated in 2025 guidelines)<\/li>\n\n\n\n<li>At least <strong>25% of branches<\/strong> must be in unbanked rural centres<\/li>\n\n\n\n<li>Applications accepted on an <strong>&#8220;on-tap&#8221; (continuous) basis<\/strong> \u2014 no waiting for a window<\/li>\n\n\n\n<li>Promoters must hold minimum <strong>40% stake<\/strong> (locked in for 5 years)<\/li>\n\n\n\n<li>SFBs can convert to universal banks after 5 years with net worth of <strong>\u20b91,000 crore<\/strong>, GNPA \u2264 3%, and listed on stock exchanges<\/li>\n<\/ul>\n\n\n\n<p><strong>\ud83c\udfaf Exam Tip:<\/strong> On-tap licensing for universal banks introduced in <strong>August 2016<\/strong>; overhauled in <strong>2025 Guidelines<\/strong>. Source: <em>RBI Universal Banks \u2013 Licensing Guidelines, 2025<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">2. Small Finance Bank (SFB) Licence<\/h2>\n\n\n\n<p>Small Finance Banks were introduced in <strong>2015\u201316<\/strong> to bring banking services to the sections that traditional banks often miss \u2014 small farmers, micro-entrepreneurs, unorganised sector workers, and MSMEs.<\/p>\n\n\n\n<p>Examples: <strong>AU Small Finance Bank, Equitas SFB, Ujjivan SFB, Capital SFB.<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Minimum paid-up equity capital: <strong>\u20b9300 crore<\/strong> (as per 2025 Licensing Guidelines)<\/li>\n\n\n\n<li>Minimum CRAR (Capital Adequacy): <strong>15%<\/strong><\/li>\n\n\n\n<li>Must lend at least <strong>75% of loans to Priority Sector<\/strong><\/li>\n\n\n\n<li>At least <strong>25% of branches<\/strong> in unbanked rural centres<\/li>\n\n\n\n<li>At least <strong>50% of loans<\/strong> must be small-ticket (up to \u20b925 lakh)<\/li>\n\n\n\n<li>Cannot lend more than <strong>10% of capital<\/strong> to a single borrower<\/li>\n<\/ul>\n\n\n\n<p><strong>\ud83c\udfaf Exam Tip:<\/strong> SFB min capital = <strong>\u20b9300 crore<\/strong>. CRAR = <strong>15%<\/strong>. PSL target = <strong>75%<\/strong>. Source: <em>RBI (Small Finance Banks \u2013 Licensing) Guidelines, 2025<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">3. Payments Bank Licence<\/h2>\n\n\n\n<p>Payments Banks are a unique concept \u2014 they can take your deposits and facilitate payments, but <strong>cannot give you a loan or issue a credit card<\/strong>. They were designed to push digital payments and financial inclusion to the last mile.<\/p>\n\n\n\n<p>Examples: <strong>Airtel Payments Bank, India Post Payments Bank, Paytm Payments Bank, Fino Payments Bank, Jio Payments Bank.<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Maximum deposit per customer: <strong>\u20b92 lakh<\/strong> (raised from \u20b91 lakh in April 2021)<\/li>\n\n\n\n<li>Minimum paid-up capital: <strong>\u20b9100 crore<\/strong><\/li>\n\n\n\n<li>Must invest <strong>75% of demand deposits<\/strong> in SLR-eligible government securities<\/li>\n\n\n\n<li><strong>Cannot<\/strong> give loans, issue credit cards, or accept NRI deposits<\/li>\n\n\n\n<li>Can distribute mutual funds, insurance, and pension products<\/li>\n<\/ul>\n\n\n\n<p><strong>\ud83c\udfaf Exam Tip:<\/strong> Payments Bank deposit cap = <strong>\u20b92 lakh<\/strong>. They CANNOT lend money. Min capital = <strong>\u20b9100 crore<\/strong>. As of 2026, there are <strong>5 operational payments banks<\/strong>. Source: <em>RBI Payments Bank Guidelines; RBI Circular DoR.LIC.REC.5\/16.13.218\/2021-22<\/em><\/p>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-vivid-cyan-blue-background-color has-background wp-element-button\" href=\"https:\/\/www.practicemock.com\/?ref= 15436\" target=\"_blank\" rel=\"noreferrer noopener\">\ud83d\udc49 Get Free Access at PracticeMock.com<\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">4. Regional Rural Bank (RRB)<\/h2>\n\n\n\n<p>Regional Rural Banks (RRBs) were set up under the <strong>RRB Act, 1976<\/strong>, with the first RRB \u2014 <strong>Prathama Bank<\/strong> \u2014 established on <strong>October 2, 1975<\/strong>. Their primary purpose is to provide banking services to rural India \u2014 especially small farmers, artisans, and agricultural labourers.<\/p>\n\n\n\n<p>Examples: <strong>Baroda UP Bank, Karnataka Gramin Bank, Dakshin Bihar Gramin Bank.<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Ownership: Centre <strong>50%<\/strong> + State Government <strong>15%<\/strong> + Sponsor Bank <strong>35%<\/strong><\/li>\n\n\n\n<li>Area of operation: Limited to specific districts notified by the Government of India<\/li>\n\n\n\n<li>Supervised by: <strong>NABARD<\/strong> (in addition to RBI)<\/li>\n\n\n\n<li>As of August 2025: <strong>28 RRBs<\/strong> operational across India<\/li>\n<\/ul>\n\n\n\n<p><strong>\ud83c\udfaf Exam Tip:<\/strong> First RRB = <strong>Prathama Bank<\/strong> (1975). Ownership = <strong>50:15:35<\/strong> (Centre:State:Sponsor Bank). Regulated by NABARD + RBI. Source: <em>Ministry of Finance \/ RBI<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">5. Co-operative Bank Licence<\/h2>\n\n\n\n<p>Co-operative Banks are <strong>member-owned<\/strong> institutions governed by the cooperative principle. They serve rural and urban communities, with a focus on agricultural credit, rural financing, and micro-financing.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Registered under the <strong>Cooperative Societies Act, 1912<\/strong><\/li>\n\n\n\n<li>Regulated by both <strong>RBI<\/strong> and the <strong>Registrar of Cooperative Societies<\/strong><\/li>\n\n\n\n<li>Structure: State Cooperative Banks \u2192 District Central Cooperative Banks \u2192 Primary Agricultural Credit Societies (PACS)<\/li>\n\n\n\n<li>Urban Cooperative Banks (UCBs) serve city\/town populations \u2014 now subject to new RBI digital banking rules from <strong>January 1, 2026<\/strong><\/li>\n<\/ul>\n\n\n\n<p><strong>\ud83c\udfaf Exam Tip:<\/strong> Co-operative banks are <strong>dual-regulated<\/strong> \u2014 by RBI and the state Registrar. Urban Co-operative Banks now must follow new digital banking directions effective <strong>January 1, 2026<\/strong>. Source: <em>RBI \/ Ministry of Finance<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The Upgrade Path \u2014 From SFB to Universal Bank<\/h2>\n\n\n\n<p>Did you know a Payments Bank or Small Finance Bank can become a Universal Bank? Here&#8217;s how:<\/p>\n\n\n\n<p>Payments Bank<\/p>\n\n\n\n<p>\u20b9100Cr min<\/p>\n\n\n\n<p>Small Finance Bank<\/p>\n\n\n\n<p>\u20b9300Cr min<\/p>\n\n\n\n<p>Universal Bank<\/p>\n\n\n\n<p>\u20b91,000Cr net worth<\/p>\n\n\n\n<p>To convert from SFB \u2192 Universal Bank: 5 years of satisfactory track record + net worth \u2265 \u20b91,000 crore + GNPA \u2264 3% + listed on stock exchange. <em>Source: RBI Universal Banks \u2013 Licensing Guidelines, 2025<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Quick Comparison Table \u2014 All Banking Licences<\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th>Licence Type<\/th><th>Can Lend?<\/th><th>Deposit Limit<\/th><th>Min Capital<\/th><th>PSL Target<\/th><th># Active (2025)<\/th><\/tr><\/thead><tbody><tr><td>Universal Bank (PSB)<\/td><td>\u2705 Yes<\/td><td>No cap<\/td><td>\u2014<\/td><td>40% of ANBC<\/td><td>12<\/td><\/tr><tr><td>Universal Bank (Private)<\/td><td>\u2705 Yes<\/td><td>No cap<\/td><td>\u20b9500 crore<\/td><td>40% of ANBC<\/td><td>21<\/td><\/tr><tr><td>Small Finance Bank<\/td><td>\u2705 Yes<\/td><td>No cap<\/td><td>\u20b9300 crore<\/td><td>75% of ANBC<\/td><td>12<\/td><\/tr><tr><td>Payments Bank<\/td><td>\u274c No<\/td><td>\u20b92 lakh\/customer<\/td><td>\u20b9100 crore<\/td><td>N\/A<\/td><td>5<\/td><\/tr><tr><td>Regional Rural Bank<\/td><td>\u2705 Yes<\/td><td>No cap<\/td><td>\u2014<\/td><td>\u2014<\/td><td>28<\/td><\/tr><tr><td>Co-operative Bank<\/td><td>\u2705 Yes<\/td><td>No cap<\/td><td>Varies<\/td><td>\u2014<\/td><td>Many<\/td><\/tr><tr><td>Foreign Bank<\/td><td>\u2705 Yes<\/td><td>No cap<\/td><td>\u2014<\/td><td>40% of ANBC<\/td><td>44<\/td><\/tr><tr><td>Local Area Bank<\/td><td>\u2705 Yes<\/td><td>No cap<\/td><td>\u20b95 crore<\/td><td>\u2014<\/td><td>2<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong>Now test yourself on everything above!<\/strong><\/p>\n\n\n\n<p>PracticeMock has 200+ Banking Awareness MCQs on banking licences, RBI policies, and financial regulators \u2014 all updated for 2026 exams. Join FREE today!<\/p>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-vivid-cyan-blue-background-color has-background wp-element-button\" href=\"https:\/\/www.practicemock.com\/?ref= 15436\" target=\"_blank\" rel=\"noreferrer noopener\">\ud83c\udfaf Start Practicing Free at PracticeMock.com<\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Wrapping Up<\/h2>\n\n\n\n<p>Banking licences in India are not all the same \u2014 and that&#8217;s exactly why the RBI designed them that way. Different licences serve different purposes: Universal Banks handle everything, Small Finance Banks focus on the underserved, Payments Banks push digital inclusion, and RRBs serve rural India.<\/p>\n\n\n\n<p>For your banking exam, the key is to remember the <strong>3 Ds<\/strong> for each licence type: <strong>Definition, Differentiators, and Data<\/strong> (capital requirements, deposit limits, counts). That&#8217;s what examiners test.<\/p>\n\n\n\n<p>\ud83d\udd25 <strong>Ready to score high in Banking Awareness?<\/strong><\/p>\n\n\n\n<p>Join 15 lakh+ aspirants on PracticeMock. Access free mock tests, Banking Awareness topic sets on licences, regulators, and reforms \u2014 all tailored to IBPS, SBI, and RRB 2026 exam patterns.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-vivid-cyan-blue-background-color has-background wp-element-button\" href=\"https:\/\/www.practicemock.com\/?ref= 15436\" target=\"_blank\" rel=\"noreferrer noopener\">\u2705 Sign Up Free at PracticeMock.com \u2014 Start Now<\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">\u2753 Frequently Asked Questions (FAQs)<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1776150551907\"><strong class=\"schema-faq-question\">Q1. How many types of banking licences are there in India?<\/strong> <p class=\"schema-faq-answer\">The RBI issues several types of banking licences in India: <strong>Universal Bank (Public Sector + Private Sector), Small Finance Bank, Payments Bank, Regional Rural Bank, Co-operative Bank, Foreign Bank, and Local Area Bank.<\/strong> Each licence has different eligibility criteria, capital requirements, and permitted activities. All licences are issued under Section 22 of the Banking Regulation Act, 1949. <em>Source: RBI \/ Ministry of Finance<\/em><\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1776150560975\"><strong class=\"schema-faq-question\">Q2. What is the maximum deposit limit in a Payments Bank?<\/strong> <p class=\"schema-faq-answer\">The maximum deposit limit per customer in a Payments Bank is <strong>\u20b92 lakh<\/strong>. This was raised from \u20b91 lakh in <strong>April 2021<\/strong> by RBI to encourage financial inclusion and allow payment banks to serve MSMEs and small traders better. Payments Banks <strong>cannot<\/strong> give loans or issue credit cards. <em>Source: RBI Circular DoR.LIC.REC.5\/16.13.218\/2021-22<\/em><\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1776150566641\"><strong class=\"schema-faq-question\">Q3. What is the ownership structure of a Regional Rural Bank (RRB)?<\/strong> <p class=\"schema-faq-answer\">RRBs have a unique ownership structure: <strong>Central Government 50%, State Government 15%, and Sponsor Bank (usually a public sector bank) 35%.<\/strong> They are regulated by both RBI and NABARD. India&#8217;s first RRB was <strong>Prathama Bank<\/strong>, established on October 2, 1975. As of August 2025, there are <strong>28 RRBs<\/strong> operational across India. <em>Source: Ministry of Finance \/ RBI<\/em><\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1776150575291\"><strong class=\"schema-faq-question\">Q4. Can a Small Finance Bank become a Universal Bank?<\/strong> <p class=\"schema-faq-answer\">Yes! As per the <strong>RBI Universal Banks \u2013 Licensing Guidelines, 2025<\/strong>, an SFB can voluntarily transition to a Universal Bank if it meets these conditions: minimum net worth of <strong>\u20b91,000 crore<\/strong>, at least <strong>5 years<\/strong> of satisfactory performance, <strong>GNPA \u2264 3%<\/strong> and NNPA \u2264 1% for the last two years, shares listed on a stock exchange, and scheduled bank status. The transition is not automatic \u2014 RBI approval is mandatory.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1776150589258\"><strong class=\"schema-faq-question\">Q5. What is &#8220;on-tap&#8221; licensing for banks?<\/strong> <p class=\"schema-faq-answer\">&#8220;On-tap&#8221; licensing means eligible entities can apply for a banking licence <strong>at any time<\/strong> \u2014 there&#8217;s no fixed window or periodic announcement. The RBI introduced on-tap licensing for Universal Banks in <strong>August 2016<\/strong> and updated the guidelines in <strong>2025<\/strong>. It also applies to Small Finance Banks under the RBI (Small Finance Banks \u2013 Licensing) Guidelines, 2025. This contrasts with the older &#8220;stop-and-go&#8221; approach where licences were issued in batches.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1776150594892\"><strong class=\"schema-faq-question\">Q6. Where can I practise MCQs on types of banking licences for my exam?<\/strong> <p class=\"schema-faq-answer\"><a href=\"https:\/\/www.practicemock.com\/?ref= 15436\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>PracticeMock<\/strong><\/a> offers topic-wise Banking Awareness mock tests specifically covering banking licences, RBI policies, types of banks, and their key features \u2014 all updated for 2026 exam patterns. You can <strong>sign up for free<\/strong> and get immediate access to hundreds of practice questions with detailed explanations. No credit card required.<\/p> <\/div> <\/div>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Understand all types of banking licences in India\u2014Universal Banks, SFBs, Payments Banks, RRBs &#038; more. Learn key differences, RBI rules, and exam-ready facts for 2026 banking exams.<\/p>\n","protected":false},"author":37,"featured_media":196703,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[22,3998],"tags":[],"class_list":["post-196701","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking-insurance","category-banking-awareness"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Types of Banking Licences in India 2026<\/title>\n<meta name=\"description\" content=\"Types of banking licences in India explained with key differences, deposit limits, capital rules &amp; exam tips for IBPS PO, SBI &amp; RRB 2026.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Types of Banking Licences in India 2026\" \/>\n<meta property=\"og:description\" content=\"Types of banking licences in India explained with key differences, deposit limits, capital rules &amp; exam tips for IBPS PO, SBI &amp; RRB 2026.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/\" \/>\n<meta property=\"og:site_name\" content=\"Practicemock\" \/>\n<meta property=\"article:published_time\" content=\"2026-04-14T15:20:00+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2026\/04\/blog-1.png\" \/>\n\t<meta property=\"og:image:width\" content=\"4938\" \/>\n\t<meta property=\"og:image:height\" content=\"2775\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Vaishnavi Dixit\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Vaishnavi Dixit\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"9 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Types of Banking Licences in India 2026","description":"Types of banking licences in India explained with key differences, deposit limits, capital rules & exam tips for IBPS PO, SBI & RRB 2026.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/","og_locale":"en_US","og_type":"article","og_title":"Types of Banking Licences in India 2026","og_description":"Types of banking licences in India explained with key differences, deposit limits, capital rules & exam tips for IBPS PO, SBI & RRB 2026.","og_url":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/","og_site_name":"Practicemock","article_published_time":"2026-04-14T15:20:00+00:00","og_image":[{"width":4938,"height":2775,"url":"https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2026\/04\/blog-1.png","type":"image\/png"}],"author":"Vaishnavi Dixit","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Vaishnavi Dixit","Est. reading time":"9 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":["WebPage","FAQPage"],"@id":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/","url":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/","name":"Types of Banking Licences in India 2026","isPartOf":{"@id":"https:\/\/www.practicemock.com\/blog\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#primaryimage"},"image":{"@id":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#primaryimage"},"thumbnailUrl":"https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2026\/04\/blog-1.png","datePublished":"2026-04-14T15:20:00+00:00","author":{"@id":"https:\/\/www.practicemock.com\/blog\/#\/schema\/person\/3d0614f77140189b92249deae12dc437"},"description":"Types of banking licences in India explained with key differences, deposit limits, capital rules & exam tips for IBPS PO, SBI & RRB 2026.","breadcrumb":{"@id":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#breadcrumb"},"mainEntity":[{"@id":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#faq-question-1776150551907"},{"@id":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#faq-question-1776150560975"},{"@id":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#faq-question-1776150566641"},{"@id":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#faq-question-1776150575291"},{"@id":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#faq-question-1776150589258"},{"@id":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#faq-question-1776150594892"}],"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#primaryimage","url":"https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2026\/04\/blog-1.png","contentUrl":"https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2026\/04\/blog-1.png","width":4938,"height":2775,"caption":"Ultimate Guide to the Top 50 Arithmetic Questions for 2026 Banking Exams"},{"@type":"BreadcrumbList","@id":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.practicemock.com\/blog\/"},{"@type":"ListItem","position":2,"name":"Banking Awareness","item":"https:\/\/www.practicemock.com\/blog\/category\/banking-awareness\/"},{"@type":"ListItem","position":3,"name":"Banking Licences in India 2026"}]},{"@type":"WebSite","@id":"https:\/\/www.practicemock.com\/blog\/#website","url":"https:\/\/www.practicemock.com\/blog\/","name":"Practicemock","description":"Practice | Analyse | Excel","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.practicemock.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.practicemock.com\/blog\/#\/schema\/person\/3d0614f77140189b92249deae12dc437","name":"Vaishnavi Dixit","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.practicemock.com\/blog\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/ec27bdfd3b40ec14389f34e1117ab798d465f996e59a18370d5a969d401a776a?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/ec27bdfd3b40ec14389f34e1117ab798d465f996e59a18370d5a969d401a776a?s=96&d=mm&r=g","caption":"Vaishnavi Dixit"},"url":"https:\/\/www.practicemock.com\/blog\/author\/vaishnavi-dixitpracticemock-com\/"},{"@type":"Question","@id":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#faq-question-1776150551907","position":1,"url":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#faq-question-1776150551907","name":"Q1. How many types of banking licences are there in India?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"The RBI issues several types of banking licences in India: <strong>Universal Bank (Public Sector + Private Sector), Small Finance Bank, Payments Bank, Regional Rural Bank, Co-operative Bank, Foreign Bank, and Local Area Bank.<\/strong> Each licence has different eligibility criteria, capital requirements, and permitted activities. All licences are issued under Section 22 of the Banking Regulation Act, 1949. <em>Source: RBI \/ Ministry of Finance<\/em>","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#faq-question-1776150560975","position":2,"url":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#faq-question-1776150560975","name":"Q2. What is the maximum deposit limit in a Payments Bank?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"The maximum deposit limit per customer in a Payments Bank is <strong>\u20b92 lakh<\/strong>. This was raised from \u20b91 lakh in <strong>April 2021<\/strong> by RBI to encourage financial inclusion and allow payment banks to serve MSMEs and small traders better. Payments Banks <strong>cannot<\/strong> give loans or issue credit cards. <em>Source: RBI Circular DoR.LIC.REC.5\/16.13.218\/2021-22<\/em>","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#faq-question-1776150566641","position":3,"url":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#faq-question-1776150566641","name":"Q3. What is the ownership structure of a Regional Rural Bank (RRB)?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"RRBs have a unique ownership structure: <strong>Central Government 50%, State Government 15%, and Sponsor Bank (usually a public sector bank) 35%.<\/strong> They are regulated by both RBI and NABARD. India's first RRB was <strong>Prathama Bank<\/strong>, established on October 2, 1975. As of August 2025, there are <strong>28 RRBs<\/strong> operational across India. <em>Source: Ministry of Finance \/ RBI<\/em>","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#faq-question-1776150575291","position":4,"url":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#faq-question-1776150575291","name":"Q4. Can a Small Finance Bank become a Universal Bank?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Yes! As per the <strong>RBI Universal Banks \u2013 Licensing Guidelines, 2025<\/strong>, an SFB can voluntarily transition to a Universal Bank if it meets these conditions: minimum net worth of <strong>\u20b91,000 crore<\/strong>, at least <strong>5 years<\/strong> of satisfactory performance, <strong>GNPA \u2264 3%<\/strong> and NNPA \u2264 1% for the last two years, shares listed on a stock exchange, and scheduled bank status. The transition is not automatic \u2014 RBI approval is mandatory.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#faq-question-1776150589258","position":5,"url":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#faq-question-1776150589258","name":"Q5. What is \"on-tap\" licensing for banks?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"\"On-tap\" licensing means eligible entities can apply for a banking licence <strong>at any time<\/strong> \u2014 there's no fixed window or periodic announcement. The RBI introduced on-tap licensing for Universal Banks in <strong>August 2016<\/strong> and updated the guidelines in <strong>2025<\/strong>. It also applies to Small Finance Banks under the RBI (Small Finance Banks \u2013 Licensing) Guidelines, 2025. This contrasts with the older \"stop-and-go\" approach where licences were issued in batches.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#faq-question-1776150594892","position":6,"url":"https:\/\/www.practicemock.com\/blog\/types-of-banking-licences-in-india-2026\/#faq-question-1776150594892","name":"Q6. Where can I practise MCQs on types of banking licences for my exam?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"<a href=\"https:\/\/www.practicemock.com\/?ref= 15436\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>PracticeMock<\/strong><\/a> offers topic-wise Banking Awareness mock tests specifically covering banking licences, RBI policies, types of banks, and their key features \u2014 all updated for 2026 exam patterns. You can <strong>sign up for free<\/strong> and get immediate access to hundreds of practice questions with detailed explanations. No credit card required.","inLanguage":"en-US"},"inLanguage":"en-US"}]}},"uagb_featured_image_src":{"full":["https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2026\/04\/blog-1.png",4938,2775,false],"thumbnail":["https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2026\/04\/blog-1.png",150,84,false],"medium":["https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2026\/04\/blog-1.png",300,169,false],"medium_large":["https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2026\/04\/blog-1.png",640,360,false],"large":["https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2026\/04\/blog-1.png",640,360,false],"1536x1536":["https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2026\/04\/blog-1.png",1536,863,false],"2048x2048":["https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2026\/04\/blog-1.png",2048,1151,false],"web-stories-poster-portrait":["https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2026\/04\/blog-1.png",640,360,false],"web-stories-publisher-logo":["https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2026\/04\/blog-1.png",96,54,false],"web-stories-thumbnail":["https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2026\/04\/blog-1.png",150,84,false]},"uagb_author_info":{"display_name":"Vaishnavi Dixit","author_link":"https:\/\/www.practicemock.com\/blog\/author\/vaishnavi-dixitpracticemock-com\/"},"uagb_comment_info":0,"uagb_excerpt":"Understand all types of banking licences in India\u2014Universal Banks, SFBs, Payments Banks, RRBs & more. Learn key differences, RBI rules, and exam-ready facts for 2026 banking exams.","_links":{"self":[{"href":"https:\/\/www.practicemock.com\/blog\/wp-json\/wp\/v2\/posts\/196701","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.practicemock.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.practicemock.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.practicemock.com\/blog\/wp-json\/wp\/v2\/users\/37"}],"replies":[{"embeddable":true,"href":"https:\/\/www.practicemock.com\/blog\/wp-json\/wp\/v2\/comments?post=196701"}],"version-history":[{"count":0,"href":"https:\/\/www.practicemock.com\/blog\/wp-json\/wp\/v2\/posts\/196701\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.practicemock.com\/blog\/wp-json\/wp\/v2\/media\/196703"}],"wp:attachment":[{"href":"https:\/\/www.practicemock.com\/blog\/wp-json\/wp\/v2\/media?parent=196701"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.practicemock.com\/blog\/wp-json\/wp\/v2\/categories?post=196701"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.practicemock.com\/blog\/wp-json\/wp\/v2\/tags?post=196701"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}