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The Reserve Bank of India (RBI) is likely to extend the deadline on applications for new banking licences by a month or two, according to senior officials. Earlier, the central bank had said the deadline for these would be July 1.
Sources said several private companies had sought clarifications from RBI on the new licensing norms, released in February. RBI had received about 400 queries regarding the final guidelines, said a source. “Everyone wants to be absolutely sure about the rules and regulations before submitting their business plan. You would probably have only one opportunity to send your application; you want to be certain about everything,” said a prospective applicant.
It is expected RBI would respond to these queries in the next few weeks.
Since aspirants have to provide business plans keeping in mind the final norms and clarifications, they might need more time to finalise the applications. Instead of replying to each query separately, RBI has decided to offer clarity on some of the norms in general. So far, RBI hasn’t received any application for a new bank licence, as all the aspirants are awaiting clarifications. As a result, RBI decided to extend the deadline for applications, the source said. Earlier, RBI had said it would offer new licences to select companies that conformed to the guidelines and had an impeccable record. Promoters of new banks would have to meet RBI’s ‘fit and proper’ criteria.
The applications will first be screened by RBI to ensure prima facie eligibility. Then, these would be referred to an advisory committee, to be set up by the central bank. The committee, to comprise eminent bankers and those with experience in the financial sector and allied areas, would present its recommendations to RBI.
A decision to issue in-principle approvals for setting up banks would be taken by RBI. The validity of the in-principle approval would be a year from the date of issue.
According to the final guidelines on new bank licences, companies, non-banking financial companies and public sector entities can apply for such licences.
The bank concerned would have to be set up through a wholly-owned non-operative financial holding company, with minimum paid-up capital of Rs 500 crore.
NORMS FOR FRESH LICENCES
* Sources said several private companies had sought clarifications from RBI on the new bank licensing norms released in February
* The central bank had received about 400 queries regarding the final guidelines, said a source
* Promoters of new banks would have to meet RBI’s ‘fit and proper’ criteria
* The applications will first be screened by RBI to ensure prima facie eligibility. Then, these would be referred to an advisory committee
* A decision to issue in-principle approvals for setting up banks would be taken by RBI. The validity of the in-principle approval would be a year from the date of issue
