The Reserve Bank of India has allowed private sector groups to seek banking licences through a wholly-owned non-operative holding company (NOHC) to be registered with the RBI as a non-banking finance company. In its draft guidelines for licencing of new banks in the private sector unveiled on Monday, the RBI has pegged the minimum capital requirement for a new bank at Rs 500 crore. Significantly, the RBI’s draft norms have not specifically barred industry houses from promoting new banks, but it listed several conditions.
“Promoters or promoter groups with diversified ownership, sound credentials and integrity that have a successful track record for at least 10 years in running their businesses will be eligible to promote banks,” the RBI said. However, it barred entities and groups that have significant (10 per cent or more) income or assets or both from activities such as real estate, construction and broking, individually or taken together, in the last three years from promoting banks. This condition will automatically rule out the entry of many high profile industry houses into banking.
Only non-financial services companies, entities and individuals belonging to the promoter group will be allowed to hold shares in the NOHC. Financial services companies belonging to the promoter group would be held by the NOHC and would not have shareholding in it. The NOHC will be registered as an NBFC with the RBI and will be governed by a separate set of prudential guidelines. NOHC will not be permitted to borrow funds for investing in companies held by it. It will just be a vehicle to hold the investments in all regulated financial sector entities on behalf of the promoter/promoter group for regulatory and prudential comfort, the RBI said. The new bank will have to be listed on a stock exchange within two years.