India's Largest Database on New Projects
RBI paved the way to India Inc with strong fences
2 September 2011: The Reserve Bank of India (RBI) paved the way for corporate India to enter banking, but set stiff conditions that straightaway shut the door on real estate companies and brokerage firms.
The private groups or entities with diversified ownership, sound credentials and a successful track record of 10 years will be allowed to apply for new banking licences. The central bank is considering issuing banking licences for the first time since 2004. Such groups or entities cannot have more than 10 per cent or more assets or income from real estate and capital market activities.
The new banks can be set up only through a wholly owned, non-operative holding company, or NOHC, that will control the bank and other financial service companies in the group, the RBI said. The NOHC, which will be registered as a non-banking finance company with the RBI, will include all financial arms of the founding group.The minimum capital required to set up new banks has been fixed at Rs 500 crore.
While laying down the detailed eligibility criteria, the RBI has made it clear the licences will be offered selectively after the final guidelines are framed and certain amendments made in the Banking Regulations Act, 1949. The central bank has sought comments on the draft norms from public and other stakeholders by 31 October 2011 .
Source : Business standard