RBI issues norms for new bank licences

The Reserve Bank of India on Friday issued the final guidelines for new bank licences.

In the new guidelines RBI allows corporates and public sector companies to set up a bank through a wholly-owned non-operative financial holding company (NOFHC).

“… The NOFHC shall be wholly owned by the promoter / promoter group. The NOFHC shall hold the bank as well as all the other financial services entities of the group.”

RBI will look into the credibility of the promoters before issuing any licence.
“Entities / groups should have a past record of sound credentials and integrity, be financially sound with a successful track record of 10 years. For this purpose, RBI may seek feedback from other regulators and enforcement and investigative agencies,” if further said.

According to the norms, foreign investment through FDI and NRI shall not exceed 49%.

Here are some key points:

•    Promoters should have good credentials and a minimum track record of 10   years to enter the banking business.
•    The minimum paid-up capital for setting up a bank is Rs 500 crore.
•    Promoter has to start operations within one year after obtaining licence
•    The promoters have to enlist the company within three years.
•    New banks should open at least 25 per cent of branches in rural areas.
•    The applications for obtaining the licence shall be submitted by July 1, 2013.

Currently, there are 26 public and 22 private banks in India.

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