Capital needed for banking licence may be doubled if RBI accepts recommendations

Promoters maximum stake in private banks may be increased from 15 pc to 26 pc RBI committee suggests. Promoters' maximum stake in private banks may be increased from 15% to 26% suggested by RBI committee

An internal working group (IWG) of the RBI said in a recommendation on Friday that the maximum limit of promoters' stake in private banks could be increased to 26 per cent of paid-up voting equity share capital in the long term from the current 15 per cent.

For non-promoter shareholdings a uniform cap of 15% instead of a current tiered structure has been suggested by the committee, which was formed in June to review ownership guidelines and the corporate structure of Indian private sector banks.

Well run large Non-banking Finance Companies (NBFCs), with an asset size of Rs 50,000 crore and above, including those which are owned by a corporate house, may be considered for conversion into banks subject to completion of 10 years of operations and meeting due diligence criteria and compliance with additional conditions specified in this regard. For players such as Equitas and Ujjivan Small Finance Bank, this could help bring in more value for investors and remove the need for double listing of the holding company and the bank. It added that banks now under the NOFHC structure may be allowed to exit from such a structure if they do not have other group entities in their fold.

It also called for strengthening of the supervisory mechanism for large conglomerates, including "consolidated supervision" which means that the RBI could supervise other entities in a group as well to ensure that banking norms are not violated. It also made it easier for payments banks to convert to small finance banks (SFBs) by reducing the track record to three years from five years now.

Stephen A. Smith Rips Saints For Starting Hill Over Jameis Winston
There was speculation that former Heisman Trophy victor Jameis Winston would get the nod, but apparently that is not the case. With Brees out, NFL Network insider Ian Rapoport said Taysom Hill was practicing with the first-team offense this week.

The panel has also recommended hiking the cap for promoter stake from 15 percent to 26 percent in the long-run. The question of higher ownership for promoters of private banks has also been a highly contentious as well as a contested issue. According to the suggestions, small finance banks and payment banks should be allowed on the stock exchange within 6 years after acquiring a net worth equal to the capital requirement to become a universal bank, or within 10 years after commencing operations, whichever period is earlier.

"While banks licensed before 2013 may move to a NOFHC structure at their discretion, once the NOFHC structure attains a tax-neutral status, all banks licensed before 2013 shall move to the NOFHC structure within 5 years from announcement of tax-neutrality", it said.

The panel has recommended raising minimum initial capital requirement for licensing new banks from Rs 500 crore to Rs 1000 crore for universal banks, and from Rs 200 crore to Rs 300 crore for small finance banks.

The Mohanty panel also recommended harmonizing of various licensing guidelines. RBI has sought comments on the draft report by 15 January. However, they may be permitted to make total investments in a financial or non-financial services company, which is not a subsidiary or joint venture or associate up to 20% of the bank's paid-up share capital and reserves. In the past several of the large corporate houses in India had applied for banking license but had either backed out or were denied by RBI. RBI will take a decision after reviewing them.

Related News:



Most liked

GoldenEye: Famous Dish Location to Be Demolished Due to "Catastrophic" Damage
Its building was completed in 1963, and for more than 50 years it has been considered the world's largest single-aperture radio telescope.

Again, Apple to pay $113m as settlement for throttling older iPhones
The investigation has now concluded, and Apple has opted to pay $113 million to settle the matter, reports The Washington Post . Apple eventually accepted the settlement and agreed to replace old batteries at a heavily-discounted price.

LA County Under Mandatory Overnight Curfew Starting Saturday Night
On Monday , Newsom stated he was considering a possible statewide curfew as he was pulling an "emergency break" on reopening. While many residents worry about the severity of the order, the states Health and Human Services Secretary, Dr.

Liverpool boost: Van Djik begins new rehab phase
The Ballon d'Or victor explained: "I have no doubts if these players were fit, then Liverpool are the best team in the land". Salah is out of Sunday's game after a second positive test for coronavirus while with the Egypt national team this week.

Masks Can Prevent COVID-19 Lockdowns — Top WHO Official
The new coronavirus pandemic has caused more than 1.3 million deaths in the world since the onset of the disease in December. Cinemas, museums, libraries, zoos and swimming pools are about to be reopened, albeit with limits on the number of people.

Contestant dead after TV tragedy during filming for Wipeout reboot
There's no word yet on how this tragedy might impact the return of the series, but stay tuned as we will keep you updated. Paramedics were then called and the man was taken to a local hospital, but he later passed away.

Dwight Howard signs with Sixers after tweeting about return to the Lakers
Now reports have surfaced that Howard has agreed to sign with the Philadelphia 76ers on a one-year, $2.6 million deal. Howard , who emerged as a key part of the Lakers' rotation in 2019-20, shared his excitement on Twitter.

Sia Responds to Criticism for Portrayal of Autism in Upcoming Film 'Music'
She also added that Maddie's character is "based on a close friend" of hers and that she "had two people on the spectrum advising me at all times".

Donald Trump Jr tests positive for coronavirus
On Friday, Rudy Giuliani's son Andrew Giuliani , who is a White House aide, announced on Twitter he had tested positive. A source familiar with the matter had told CNN at the time that all guests were to receive a rapid test for Covid-19.

WHO Advises Against Use of Gilead's Remdesivir as Coronavirus Treatment
The FDA approved remdesivir as a treatment for severe COVID-19 cases last month, after granting emergency authorization in May. Indeed, despite its initial promise, remdesivir has mostly failed to live up to the hype in subsequent studies.

Apple to pay another US$113M to settle iPhone battery claims
It was a scandal that was fittingly dubbed as " batterygate " and it led to a class action lawsuit. The Washington Post first reported the news.

As semester draws to a close, MWSU reports low covid-19 cases
Binghamton University announced Tuesday that it will switch to remote learning for the second time this semester . As the COVID-19 pandemic continues, many students opt for testing before they travel home to their families.

UK PM says he backs interior minister after inquiry into her conduct
Instead, the Prime Minister is expected to release an assessment of its findings by his adviser on ministerial standards, Sir Alex Allan.

APEC leaders vow to fight pandemic
Both the CPTPP and RCEP are seen as building blocks of a larger Free Trade Area of the Asia-Pacific that Apec has set as a goal. He urged them make the region a "pacesetter for innovation" and to "actively fulfill" their social responsibilities.

Immunization against COVID-19 could last years, study claims
Exposure to cigarette smoke makes airway cells more vulnerable to infection with the new coronavirus , UCLA researchers found. The MMR II vaccine, manufactured by Merck and licensed in 1979, works by triggering the immune system to produce antibodies.