On-tap banking licences: RBI proposes 10% cap for biz houses | business | Hindustan Times
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On-tap banking licences: RBI proposes 10% cap for biz houses

Moving towards on-tap licensing regime, the Reserve Bank of India (RBI) has proposed allowing professionals with 10 years of experience to promote full-fledged banks, but said business houses can come in only as investors with less than 10% stake.

business Updated: May 05, 2016 22:56 IST
HT Correspondent
The draft guidelines, released by the RBI on Thursday, are based on a discussion paper by the central bank in 2013.
The draft guidelines, released by the RBI on Thursday, are based on a discussion paper by the central bank in 2013. (Arijit Sen/HT File Photo)

Moving towards on-tap licensing regime, the Reserve Bank of India (RBI) has proposed allowing professionals with 10 years of experience to promote full-fledged banks, but said business houses can come in only as investors with less than 10% stake.

On-tap licensing means that the RBI window for granting licences will be open through the year.

The RBI also proposed a lowering of the minimum ownership level for firms or people setting up lenders under a financial holding structure to 51% from 100%.

The draft guidelines, released by the RBI on Thursday, are based on a discussion paper by the central bank in 2013. The RBI is seeking feedback to its proposals by June 30.

The proposed norms are likely to upset the plans of large business houses, which had lost out in the last round of distribution of bank licences and were eagerly waiting for on-tap regime to set up their own banks.

The guidelines have made resident individuals and professionals having 10 years of experience in banking and finance as eligible for promoting universal banks.

“The initial minimum paid-up voting equity capital for a new bank shall be `500 crore and the bank shall have a minimum net worth of `500 crore at all times.”

While assuming charge on September 4, 2013, governor Raghuram Rajan had said that one of his reform measures would be to put bank licensing on-tap. He fulfilled a part of it in April 2014 by issuing in-principal approvals to IDFC and Bandhan. Rajan took the second step by announcing in-principle nod to 10 payments banks and 11 small finance banks last year.