PFC to send comments on draft guidelines for new banks soon

State-run lender Power Finance Corporation (PFC) will send its comments on the draft guidelines for business houses to set up commercial banks to the Reserve Bank of India (RBI) in the next couple of days.

PFC, a non-banking finance company (NBFC), plans to appoint a consultant for advice on a prospective entry into the banking sector, either by setting up a bank or picking up equity in one of them.

"We would be giving our comments to RBI in the next two-three days on the draft guidelines which were released yesterday," PFC Chairman and Managing Director Satnam Singh told PTI.

"We will appoint a consultant, which would advice us as to whether our current structure will work or some change is required, whether we should set up a bank or pick up an equity stake in any of them," Singh said.

The RBI yesterday released draft guidelines for allowing business houses with a successful track record and minimum capital of Rs 500 crore to set up commercial banks. The guidelines also provide a framework for converting non-banking financial companies into banks.

As per the draft guidelines, the minimum capital requirement for a company to set up a bank has been pegged at Rs 500 crore, up from the existing Rs 300 crore.

Finance Minister Pranab Mukherjee, in his Budget speech for the 2009-10 financial year, had said the RBI would grant banking licences to private sector players and non-banking finance companies (NBFCs).

As per the draft guidelines, companies which are primarily engaged in real estate or stock broking will not be eligible for setting up banks.

The draft guidelines state that the new banks will be set up only through wholly-owned non-operative holding companies (NOHC) registered with the RBI as NBFCs, which will administer the bank as well as all the other financial companies in the promoter group.