RBI bars realty, broking firms from setting up banks

29 Aug 2011

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Private sector entities or groups, owned and controlled by resident Indians, with diversified ownership, sound credentials and integrity and having successful track record of at least 10 years will be eligible to promote banks.

However, entities or groups having significant (10 per cent or more) income or assets or both from real estate construction and / or broking activities individually or taken together in the last three years will not be eligible, Reserve Bank of India (RBI) said in its draft guidelines issued today.

All new banks will have a wholly-owned non-operative holding company (NOHC) and should get themselves registered with the Reserve Bank as a non-banking finance company (NBFC), which will hold the bank as well as all the other financial companies in the promoter group.

RBI, however, has now prescribed a lower minimum capital requirement of Rs500 crore against the Rs1,000 crore proposed earlier. The minimum capital brought in may go up depending on the business plan of the promoters.

The holding company should hold a minimum 40 per of the paid-up capital of the bank for a period of five years from the date of licensing of the bank. Shareholding by NOHC in excess of 40 per will be brought down to 20 per cent within 10 years and to 15 per cent within 12 years from the date of licensing of the bank.

RBI has set the aggregate non-resident shareholding limit for new banks at a maximum of 49 per cent of the total equity capital for the first five years, after which it will be as per the extant policy.

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