New banks: What RBI’s clarifications mean

On Monday, the central bank issued clarifications on the licensing of new banks. Here’s what they mean
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First Published: Tue, Jun 04 2013. 08 32 AM IST
RBI says it has received 443 queries from individuals (34) and organizations regarding the licensing of new banks. Photo: Pradeep Gaur/Mint
RBI says it has received 443 queries from individuals (34) and organizations regarding the licensing of new banks. Photo: Pradeep Gaur/Mint
Updated: Tue, Jun 04 2013. 07 02 PM IST
New Delhi: India’s central bank said it has received 443 queries from 34 individuals and organizations regarding the licensing of new banks. The deadline for applications is 1 July. On Monday, the Reserve Bank of India (RBI) issued several clarifications on the process. Here’s a look at what they mean:
1. Applicants who get RBI’s approval to set up a bank now have 18 months to do so, against the earlier 12. This means successful applicants have more time to move to the holding structure mandated by the central bank.
2. RBI doesn’t have a number in mind for the licences to be issued. It has said it “will look for very high-quality applications” and that it “may not be possible to issue licences to all applicants meeting the eligibility criteria”.
3. The central bank wants the new banks to have a non-operative financial holding company (NOFHC) structure.
4. RBI has said there will be no relaxation of norms regarding the amount of cash banks have to keep with the central bank (cash reserve ratio, or CRR), the amount of government bonds they will need to hold (statutory liquidity ratio, or SLR), and the proportion of loans they will have to give to the so-called priority sector.
5. Applicants have about 37 months to meet priority sector lending norms from the time the in-principle approval is granted.
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First Published: Tue, Jun 04 2013. 08 32 AM IST
More Topics: RBI | new banks | licence | applicants |
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