On-tap bank licence not for big corporates

• Large industrial houses, whose income from non-banking sources is over 40 per cent of total will not be eligible to set up a universal bank in the country, the Reserve Bank of India (RBI) said on Monday. However, they are allowed to pick up 10 per cent stake in banks.

• Final guidelines

1. The central bank has allowed individuals with 10 years of experience in banking and finance, as well as business groups with 10 years’ track record to promote universal banks. For business groups with more than Rs.5,000 crore in total assets to be eligible for a licence, their income from non-financial businesses should not account for 40 per cent or more in terms of total assets/in terms of gross income.
2. Large industrial houses are excluded as eligible entities but are permitted to invest in the banks up to 10 per cent,” RBI said in its guidelines statement.The existing non-banking financial companies (NBFCs) that are controlled by residents and have a successful track record for at least 10 years will also be eligible. However, an NBFC, which is a part of the group where the non-financial business of the group accounts for 40 per cent or more in terms of total assets/gross income, is not eligible, the banking regulator clarified.
3. The bank should have a minimum capital of Rs.500 crore and should list on the stock exchanges within six years of commencing operations, RBI said. The bank shall open at least 25 per cent of its branches in unbanked, rural centres. The bank should also maintain a capital adequacy ratio of 13 per cent in the first three years of operation as compared to 9 per cent in existing banks.