RBI to clarify new banking licence queries on June 3

Moneycontrol Bureau

The Reserve Bank of India (RBI) will issue clarifications on Monday, June 3 against queries sent by different external parties in respect of new private banking licence. 

Earlier, RBI had issued guidelines for licensing of new banks on February 22, 2013. Following issue of the guidelines, the central bank received several queries regarding the guidelines.

Also read: RBI alert: What to check before making deposits with NBFCs

"To comprehensively reply to all queries, RBI issued a press release on March 7, 2013 asking that queries on the guidelines may be sent to the Reserve Bank by April 10, 2013 and that clarifications would be posted on its website on June 03, 2013," it said in a release issued on Friday.

Speculations are rife that RBI may issue around three-to- four banking licences. In 2003-04, it had granted licences to Yes Bank and Kotak Mahindra Bank to offer banking services. This time, companies like L&T Finance, Mahindra Finance, Shriram Captial, Tata Capital, Bajaj Finance, according to a market buzz, are the potential candidates to apply for banking licence.

Entities both from private and public sectors shall be eligible to set up a bank through a wholly-owned non-operative financial holding company (NOFHC). A business group, which is keen on applying for a license should have a minimum paid up equity capital of Rs 500 crore, states RBI guidelines.

At the start of banking operations, NOFHC should hold a minimum of 40 per cent of the equity capital of the bank with a lock-in period of five years. Later, it has to be brought down to 15 percent within 12 year from that onwards.

The banking regulator had put a stricter condition of having 25 percent of its branches in unbanked rural areas with population upto 9,999. Many believe, for a new banking entity, it will be stumbling block as the brick and mortar model especially in rural areas take time to turn profitable.

"For banking licence, RBI will prioritise the brand factor first. Licence cannot be given to any corporate without proper credential. In that case, it will be misused. Companies may use their banking network to support their group company businesses. However, nothing is finalised," a senior RBI official had told moneycontrol.com on condition of anonymity.

saikat.das@network18online.com