‘New banks must meet priority sector lending norms from Day 1’

Our Bureau Updated - November 20, 2017 at 07:10 PM.

Realty, broking firms can start banks if they satisfy all norms, says K. C. Chakrabarty

K. C. Chakrabarty, Deputy Governor, RBI.

Real estate and broking firms can get banking licence if they meet the eligibility criteria outlined by the RBI, said K. C. Chakrabarty, Deputy Governor.

When asked if players with large exposure to real estate and broking will be given banking licence, Chakrabarty said: “These are legitimate businesses and if they can demonstrate that they can satisfy all the requirements and concerns, we will give them.”

In the final guidelines on new bank licences, the RBI reversed the stand it had taken in the draft guidelines of not allowing broking and real-estate companies in the banking space.

The RBI has, however, said that the promoter’s business model and business culture should not be misaligned with the banking model.

On the number of licences to be issued, Chakrabarty said: “It all depends on the eligibility… few or many would not matter. If nobody is fit and proper, then what is the use of giving the licences?”

Priority sector lending

New banks will have to put in efforts to meet the priority sector lending requirements from the word go, said Chakrabarty. Priority sector lending includes giving loans to segments such as agriculture, small-scale industry, small businesses, education and housing.

According to Chakrabarty, new banks will need to meet the priority sector lending requirements from “day one”. “Lend to agriculture first and then look for other business,” he said on the sidelines of an IIFL investor conference.

Currently, all existing public and private sector banks need to lend at least 40 per cent of their loans to the priority sector.

> Beena.parmar@thehindu.co.in

Published on February 26, 2013 16:44