On tap banking licence: RBI says entity must have Rs500 crore capital, get listed in six years
The Reserve Bank of India (RBI) came out on Monday with its guidelines for 'on-tap' licensing of universal banks in the private sector. According to the guideline the initial minimum paid-up voting equity capital shall be Rs500 crore and thereafter the bank should have a minimum net worth of Rs500 crore at all times.
A minimum start-up capital of Rs500 crore; minimum promoter holding of 40% (lock-in period five years); listing of the shares within six years; and promoters' holdings to be brought down to 15% in 15 years are some of the stipulations laid down by the regulator on Monday for getting a bank licence on tap.
The bank shall open at least 25% of its branches in unbanked rural centres (population up to 9,999 as per the latest census). The bank shall comply with the priority sector lending targets and sub-targets as applicable to the existing domestic scheduled commercial banks, RBI said.
As per the guidelines, promoters and the promoter group or non-operative financial holding company (NOFHC), as the case may be, should hold a minimum of 40% of the paid-up voting equity capital of the bank, which will be locked in for five years from the date of commencement of business of the bank.
The promoter group shareholding shall be brought down to 15% within 15 years from the date of commencement of business of the bank, the RBI said.
"The bank shall get its shares listed on the stock exchanges within six years of the commencement of business by the bank," as per the RBI guidelines.
As to the eligibility of the promoters the RBI said (i) Individuals/professionals who are 'residents' and have 10 years of banking and finance experience at a senior level;
(ii) Entities/groups in the private sector that are 'owned and controlled by residents' (as defined in FEMA Regulations) and have a successful track record for at least 10 years. However if such entity/group has total assets of Rs 50 billion or more, the non-financial business of the group does not account for 40% or more in terms of total assets or gross income;
(iii) Existing non-banking financial companies (NBFCs) that are 'controlled by residents' and have a successful track record for at least 10 years.
The RBI said the promoter of the bank should be 'fit and proper' with a past record of sound financials, credentials, integrity and have a minimum 10 years of successful track-record.
Promoters having other group entities shall set up the bank only through an NOFHC. Not less than 51% of the total paid-up equity capital of the NOFHC shall be owned by the promoter/ promoter group, as per the RBI guidelines.
No shareholder, other than the promoters/promoter group, shall have significant influence and control in the NOFHC, the RBI has stipulated.
The bank is precluded from having any exposure to its promoters, major shareholders who have shareholding of 10% or more of paid-up equity shares in the bank, the relatives of the promoters as also the entities in which they have significant influence or control.