RBI to clarify new banking licence norms shortly

Moneylife Digital Team 07 March 2013

The RBI had posted the final guidelines after almost three years of the then finance minister Pranab Mukherjee making an announcement in the Budget to allow new private banks

The Reserve Bank of India (RBI) on Thursday said it will issue clarifications on the final guidelines for new bank licences shortly, in order to address the concerns of intending applicants.

The regulator said many entities and groups interested in joining the banking fray have been posting queries ever since the guidelines were made public on 22nd February.

Assuring that the identity of those seeking clarifications will be protected, the banking regulator invited them to write in by 10th April. However, RBI has not mentioned when it would come out with the clarifications.

“Considering that the clarifications sought would be of wider interest and use for all intending applicants, the RBI has decided to post the clarifications on its website,” it said.

The RBI had posted the final guidelines after almost three years of the then finance minister Pranab Mukherjee making an announcement in the Budget to allow new private banks. RBI last gave bank licences around a decade back.

Many business houses, including the Tatas, Birlas, Mahindras, Anil Ambani-led Reliance Capital, asset financier Shriram Capital, LIC and India Post among others have shown interest or are tipped to contemplate an entry into the banking fray.

The interested parties have been given time till 1st July to apply.

Among other things, the guidelines have allowed any entity—be it a private or government owned—having its roots in any sector, including brokerages and realty, to apply for banking licence.

The RBI, however, said it will go by “fit and proper” criteria, which will include having a past record of sound credentials, integrity and financial soundness with a successful track record of 10 years, while giving licences.

Other requirements include an initial capital of Rs500 crore to be brought in by the promoter.

Comments

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M G WARRIER

1 decade ago

This is a welcome gesture. Perhaps, beyond the routine re-statement of 'level playing field', obligation to comply with priority sector lending targets, 25% rural branches and so on, RBI could consider giving preference to applicants who can meet national priorities faster. Even the announcement of 'All Woman Bank' did not carry any accompanying assurance to support priority sector, financial inclusion or 'weaker section' beyond what is being done by existing public sector banks. Surprisiongly, while earlier 'New Gen Private Sector' banks had a reason to enter, namely infusing competetion, increased use of technology and absence of the burden of 'past performance', the present effort is to 'satisfy' certain categories of intending promoters of new banks rather than meeting the banking needs of the country.