The Reserve Bank of India (RBI) on May 17 said it has found six applicants not suitable for permits of small finance bank licences and universal bank licences after an examination.
Those found not suitable for universal bank permits are UAE Exchange and Financial Services Limited, The Repatriates Cooperative Finance and Development Bank Limited (REPCO Bank), Chaitanya India Fin Credit Private Limited, and Shri Pankaj Vaish, and others.
The applicants not found suitable for SFB permits are VSoft Technologies Private Limited and Calicut City Service Co-operative Bank Limited.
The remaining applications are under examination, the RBI said.
The RBI had received 11 applications to set up bank under the guidelines for ‘on tap’ licensing of universal banks and small finance banks.
The examination of six applications has now been completed, the central bank said, adding six applicants were not found suitable for granting of in-principle approval to set up banks.
The remaining applicants for SFB licences under examination are Akhil Kumar Gupta, Dvara Kshetriya Gramin Financial Services Private Limited, Cosmea Financial Holdings Private Limited, Tally Solutions Private Limited and West End Housing Finance Limited.
Under the guidelines for ‘on tap’ Licensing of Universal Banks in the Private Sector issued by RBI in August 2016, large industrial houses cannot apply for bank permits. Also, eligible promoters need to have at least 10 years of experience in the financial sector.
Also, under the fit and proper criteria, promoters should have a past record of sound financials, credentials, and integrity, and have a minimum of 10 years of successful track record.
Further, the RBI guidelines have stipulated an initial minimum paid-up voting equity capital for a bank shall be Rs 500 crore. Thereafter, the bank shall have a minimum net worth of Rs 500 crore at all times. The promoter or holding company needs to hold a minimum of 40 percent of the paid-up voting equity capital of the bank with a lock-in period of five years.
The RBI has a step-by-step process to examine applications for banking permits. In the initial stage, the applications will be referred to a Standing External Advisory Committee (SEAC) to be set up by the Reserve Bank.
The committee will then submit its recommendations to the Reserve Bank for consideration. The Internal Screening Committee (ISC), consisting of the Governor and the Deputy Governors, will examine all the applications and then submit its recommendations to the Committee of the Central Board of the Reserve Bank for the final decision to issue in-principle approval.Even if an applicant meets the eligibility criteria, the central bank can exercise its discretion to decide whether an applicant is fit to run a bank or not. Last time, the RBI issued universal banking permits was in 2015 when IDFC and Bandhan were given banking licences.