Corporates with sound credentials can set up banks: RBI
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Also, the provisions regarding permitting existing non-banking financial companies (NBFCs) to convert into banks will also meet the demand of NBFCs sector, he added.
The Reserve Bank today released the final guidelines for issuing of new banking licences, allowing entities in the private and the public sector as well as non-banking financial companies to enter the fray.
Assocham said the corporate governance requiring at least 50 per cent of directors of the non-operative financial holding company (NOFHC) is also a major step which will create more transparency and infuse adequate oversight on the functioning of the new banks.
The RBI, which allowed private banks in 1993, had issued the last set of licences in 2001 to two entities-- Kotak Mahindra Bank and Yes Bank.
Following are the highlights of the Reserve Bank's guidelines for licensing of new banks in the private sector:
* Corporates, PSUs and NBFCs can set up a bank
* No bar on entities in sectors like brokerage, realty
* Minimum paid-up equity capital to be Rs 500 crore
* New banks to get listed within 3 years of business
* Foreign shareholding limited to 49% for first 5 years
* RBI to seek feedback on applicants' background from other regulators, Income Tax, CBI and ED
* Licence seeker should have 10 years of successful financial track record, sound credentials and integrity
* To comply with priority sector lending targets; open at least 25 per cent branches in unbanked rural areas
* Boards to have majority of independent directors
* Business plan should be realistic, viable and address financial inclusion
* Applications will be screened by RBI and referred to a high level advisory committee
* To ensure transparency, names of applicants will be placed on RBI's website
* Last date for applying for the licence is July 1
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