RBI has just issued its guidelines for issuing the new set of banking licenses. This is interesting as the licenses would now be issued after almost 10 years since the last set were issued.
- Entities/groups should have a past record of sound credentials and integrity, be financially sound with a successful track record of 10 years.
- Minimum paid-up capital of Rs 500 crore.
- Foreign investment, including FDI/FII and NRI, capped at 49 per cent
- On receipt of licence, operations have to commence within one year and should be listed in next 3 years
- Promoters would need to set up a wholly-owned Non-Operative Financial Holding Company (NOFHC).
- At least 25 per cent of branches to be in unbanked rural centres. This will be challenging as even existing banks have not been able to come good on this clause.
- Detailed feedback would be sought about the applicants from other regulators, enforcement, investigative agencies like I-T Department, CBI, ED etc.
Keep track of all action on new banking license front.