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“RBI has been receiving queries from intending applicants, seeking clarifications on the guidelines on licensing new banks in the private sector,” the banking regulator said today. “Considering the clarifications sought would be of wider interest and use for all intending applicants, the Reserve Bank has decided to post the clarifications on its website. The identity of those who raise queries would be kept confidential,” it added.
The central bank has asked prospective applicants to mail their queries by April 10.
After issuing a discussion paper on new bank licences in August 2010 and the draft guidelines for these a year later, RBI had released the final norms last month.
Experts said it was likely applicants had sought clarifications on how non-operative financial holding companies (NOFHCs) would work. Questions might also have been raised on the number of licences RBI would issue. A few days ago, RBI Deputy Governor K C Chakrabarty had said the number of licences issued would depend on the number of applicants found eligible.
Clarifications have also been sought on the selection process, including the timeline and relative weight for each aspect. In its final guidelines, RBI had listed several ‘fit and proper’ criteria, the corporate structure of NOFHCs, foreign shareholding in the bank, business plans, etc.
Experts also said clarifications might have been sought on the deadline for applications and whether that could be extended. RBI has set July 1 as the deadline for submitting the applications.
Applicants are concerned on the compulsory dilution of stake after three years. They feel those who build a bank might not get proper valuation for the divestment of their stake in such a short period. In the final norms, RBI had said if NOFHCs held more than 40 per cent stake in a bank, the stake would have to be reduced to 40 per cent within three years of the commencement of the bank’s operations.
Non-banking financial companies (NBFCs) are concerned about converting an existing NBFC into a bank. The Shriram Group, which is keen on a banking licence, has said it would seek clarification from RBI on this issue.
Most aspirants intend to keep their NBFCs and bank as separate entities. In its final norms, RBI had mandated NBFCs wouldn’t be allowed to carry out businesses that a bank was allowed to.
FOR A CLEAR PICTURE
- Banking licence applicants can mail their queries by April 10
- Applicants may seek clarification on how non-operative financial holding company will work
- People may want to know how many new licences RBI is actually going to issue
- Clarity regarding selection process, timeline and relative weightage for each aspect of the applicant will also be sought
- Another concern among non-banking financial companies is conversion of the existing firm into a bank
