The Reserve Bank of India is likely to issue clarifications on new bank licence guidelines as sought by interested entities early next month, a senior RBI official has said.
“We have received queries from various entities. RBI will be posting on its Web site all the relevant clarifications with regard to new bank licence guidelines by this month-end or early next month so that they get ample time to file applications,” he said.
The RBI had released guidelines for new bank licences in February, asking the aspirants to submit applications by July 1, 2013.
Many large business groups such as Anil Ambani-led Reliance Group, L&T, Mahindras, Birlas, Religare and Videocon have already made public their intentions to apply for the licences, while many NBFCs including Shriram group, Indiabulls, India Infoline, IFCI and PFC, have also shown interest.
Those reported to be interested in banking licence also include Tatas and Mukesh Ambani-led RIL group.
Conservative approach
However, the RBI is expected to follow a conservative approach and allow 4-5 new players in an already highly competitive banking sector.
Many aspirants have roped in former bank chiefs and other senior bankers from India and abroad as consultants to help them prepare for seeking the licence. Interestingly, a large number of real estate players have shown initial interest despite their financial positions not being entirely in adherence to the norms spelt out by RBI.
After July 1, the last date of application for bank licence, RBI will make public the names of all the interested entities. Bank licences were last given by RBI about a decade back.
Interpretation of clauses
A large number of clarifications could be relating to interpretation of various clauses of the new bank licence norms, as many entities had complained of ‘ambiguity’ on various fronts.
Applicants from the NBFC space have also sought to know whether RBI would allow conversion of all their Tier-1 branches and locations into bank branches in case of the transfer of their existing activities into various banking functions.
They have sought to know what will happen to the Tier 1 branches that are not allowed to be converted to bank branches, sources said.
RBI guidelines
As per RBI’s guidelines, those eligible to apply for banking licence include entities or groups in the private sector, entities in public sector and non-banking financial companies through a wholly-owned non-operative financial holding company (NOFHC).
Clarifications have also been sought on the corporate structure of NOFHC as well. The central bank has said that the NOFHC shall be wholly owned by the promoters and should hold the bank as well as all the other financial services entities of the group.