"Entities/groups in the private sector, entities in the public sector and non-banking financial companies (NBFCs) shall be eligible to set up a bank through a wholly-owned non-operative financial holding company (NOFHC)," RBI said in a notification.
The document, however, does not mention how many licences will be issued. July 1 is the last date for making the applications. New banks will have to set up 25 per cent of its branches in unbanked rural areas. The final guidelines sets 49 per cent cap on foreign holding in new banks and minimum paid-up equity capital is Rs 500 crore.
Existing NBFCs, if considered eligible, may be permitted to promote new banks or convert themselves into banks. Unlike the draft guidelines wherein the RBI had expressed reservations about allowing realty players, brokerages and state-run enterprises into the fray, there is no such explicit mention in the final guidelines.
"Entities/groups should have a past record of sound credentials and integrity, be financially sound with a successful track record of 10 years," the final guidelines said. The paid-up equity capital should be Rs 500 crore and they will have to get listed within three years of operations, the guidelines added.
The RBI, which allowed private banks in 1993, had issued the last set of licences in 2001 to two entities-- Kotak Mahindra Bank and Yes Bank.
The Reserve Bank said the aggregate non-resident The Reserve Bank said the aggregate non-resident shareholding (foreign shareholding) in the new bank will be up to 49 per cent for the first five years, after which it will be as per the existing policy.
Referring to the corporate structure of the proposed banks, it said NOFHC shall be wholly owned by the promoter or promoter group, which will hold the bank as well as all the other financial services entities of the group.
The RBI, however, clarified that "the NOFHC and the bank shall not have any exposure to the promoter group. The bank shall not invest in the equity or debt capital instruments of any financial entities held by the NOFHC".
To ally fears regarding conflict of interest that may arise if a corporate entity opens up a bank, the notification said: "The RBI will have to be satisfied that the corporate structure does not impede the financial services entities held by the NOFHC from being ring-fenced, that it would be able to supervise the bank, the NOFHC, and its subsidiaries/joint ventures/associates on a consolidated basis....".
According to the notification, the primary supervision of the entities held by the NOFHC will be done by the sectoral regulators. Referring to business plan of the proposed entities, the notification pointed out that at least 25 per cent of the branches should be located in rural areas. "The new banks shall open at least 25 per cent of their branches in unbanked rural centres (population up to 9,999 as per the latest Census)", the report said, adding that all priority sector norms would be applied to the new entities as well.
RBI, however, said those banks promoted by groups having 40 per cent or more assets or income from non-financial business will require its approval for raising paid-up equity capital beyond Rs 1,000 crore for every block of Rs 500 crore.