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REPCO Bank may appeal RBI’s decision to reject universal bank permit application; others undecided

The RBI said six of 11 applicants were not suitable for permits of small finance bank and universal bank licences.

May 18, 2022 / 07:49 PM IST
Representative image.

Representative image.

The Repatriates Cooperative Finance and Development Bank (REPCO Bank) may appeal against the regulator’s decision to reject its application for a universal bank licence, a company official said.

“We are examining whether we should send an appeal to the Reserve Bank of India (RBI) for reconsideration of our universal bank licence as we are a traditional bank with a base of over Rs 16,000 crore,” REPCO Bank general manager PK Vaidyanathan told Moneycontrol on May 18.

REPCO Bank had earlier applied for a small finance bank permit through Repco Microfinance, but the RBI had rejected that proposal too, Vaidyanathan said.

However, REPCO being a traditional legacy bank with business of Rs 16,400 crore, will “definitely” look at alternatives for getting a banking licence. The bank expects its business to grow to Rs 18,000 crore by the end of FY23, he added.

The Chennai-based, state-owned company is awaiting clarification from the RBI for the exact reasons for rejection of its application, he said.

Close

Six applicants were found unsuitable for permits of small finance bank (SFB) and universal bank licences, the RBI said on May 17. Along with Repco, billionaire Sachin Bansal-led Chaitanya India Fin Credit was not found fit for a universal banking licence.

Others found not suitable for universal bank permits were UAE Exchange and Financial Services, and Shri Pankaj Vaish and others.

Applicants not found suitable for SFB permits were VSoft Technologies and Calicut City Service Cooperative Bank.

The RBI received 11 applications to set up banks under guidelines for ‘on tap’ licensing of universal banks and small finance banks. The remaining five applications are under examination, the RBI said.

Wait and watch mode

“We respect the RBI’s decision and will be analysing it in further detail while examining our options,” a spokesperson for Navi Technologies, the parent company of Chaitanya India Fin Credit, said in a statement. “We will decide our next steps in due course while keeping in mind the interest of all stakeholders.”

When contacted, Pankaj Vaish declined to comment.

VSoft Technologies, Calicut City Service Co-operative Bank and UAE Exchange and Financial Services, did not respond to queries from Moneycontrol for comments on their plans. This story will be updated with their response, if any.

Applications for SFB licences under examination are from Akhil Kumar Gupta, Dvara Kshetriya Gramin Financial Services, Cosmea Financial Holdings, Tally Solutions, and West End Housing Finance.

Under the guidelines for ‘on tap’ licensing of universal banks in the private sector issued by the RBI in August 2016, large industrial houses cannot apply for bank permits. Eligible promoters must have at least 10 years of experience in the financial sector.

Under the fit-and-proper criteria, promoters should have a record of sound financials, credentials, and integrity, and at least 10 years of a successful track record.

The RBI guidelines stipulated an initial minimum paid-up voting equity capital of Rs 500 crore for a bank. Thereafter, the bank must have a minimum net worth of Rs 500 crore at all times. The promoter or holding company needs to own a minimum of 40 percent of the paid-up voting equity capital of the bank, with a lock-in period of five years.
Piyush Shukla
Siddhi Nayak is correspondent at Moneycontrol.com
first published: May 18, 2022 05:06 pm
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