The Reserve Bank of India (RBI) has issued the final guidelines for licensing of new private sector banks wherein entities both from private and public sector shall be eligible 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. Entities/ groups should have a past record of sound credentials and integrity, be financially sound with a successful track record of 10 years,” RBI said in a release. As per the new norms, entities will be eligible for licence after clearance from sector regulators, enforcement, investigative agencies such as I-T Department, CBI and ED. The minimum paid-up capital for setting up a bank will be Rs 500 crore. The cap on the foreign investment, including FDI/FII and NRI, has been set at 49%. RBI has set a deadline of July 1 for filing application by interested entities.
The final guidelines pave the way for corporate houses like Anil Dhirubhai Ambani Group, Larsen & Toubro, Tatas, Mahindra and Mahindra, Life Insurance Corporation and Aditya Birla Group to enter the banking business. Non-banking financial companies like Bajaj, Tata, Shriram Transport, Religare, SREI, and Reliance Capital have shown interest in the banking sector. As per norms notified by RBI, on receipt of licence, promoter has to start operations within one year and list the company within three years of commencement of the business. Also, new banks should open at least 25 per cent of branches in unbanked rural centres.
At present, there are 26 public sector banks and 22 private sector banks. Only 35% of India’s adult population has accounts with banks and other financial institutions as compared to a global average of 50%.
