Mumbai: The Reserve Bank of India (RBI) has granted in-principle approvals to Kotak Mahindra Finance and Rabobank for their proposals to set up banks.
In the case of Kotak Mahindra, which is a non-banking financial company (NBFC), the RBI has stipulated that it has to convert itself into a bank and continue simultaneously as an NBFC. Rabobank had applied for banking licence jointly with three individuals two banking professionals, Rana Kapur and Harkirat Singh, and one Ashok Kapur.
The approval follows the recommendations of a high-level committee chaired by former RBI governor Dr I G Patel that both the applicants were suitable for setting up new banks, according to an RBI release.
The in-principle approvals will be valid for one year, during which time the applicants can mobilise the required capital and fulfil other conditions outlined in RBI guidelines for licensing of new banks in the private sector.
On being satisfied that the applicants have complied with the requisite conditions laid down by the RBI as part of the in-principle approval, they will be considered in due course for grant of a licence for commencement of banking business under Section 22 (1) of the Banking Regulation Act, 1949, the release said.
The apex bank will consider inviting fresh applications for new banks in the private sector after three years from now after further reviewing the working of the private sector banks. The guidelines issued in 2001 may also be revised if considered necessary, the release added.