RBI released much awaited guidelines for on tap universal banking license

Q.  RBI has released the on tap universal banking license excluding which group as eligible entities from the purview?
- Published on 02 Aug 16

a. Small industrial houses
b. Medium industrial houses
c. Large industrial houses
d. None of the above

ANSWER: Large industrial houses
While releasing on tap universal banking license and excluding large industrial houses as eligible entities from the purview, RBI said investment in banks up to 10 percent is permitted.
  • According to Guidelines for on tao Licensing of Universal Banks in the private sector, the initial minimum paid up voting equity capital for a bank should be INR 500 crore and thereafter, the bank should have minimum net worth of INR 500 crore at all times.
  • Individuals and professionals that are residents at senior level and existing non banking financial companies that are controlled by residents and have a successful track record for atlas 10 years in banking and finance at senior level and NBFCs controlled by residents with a good track record of 10 years can apply for the license.
  • Entities/groups in the private sector owned and controlled by entities and a successful track record for 10 years with total assets of INR 5000 crore or more such that non financial business of the group does not account for more than 40 percent or so in terms of total assets/gross income are also eligible promoters.
  • Applicants have to meet the Fit and Proper criteria.
  • Promoter/promoting entity/promoter group should have good track record of sound financial, credentials, integrity an at least 10 years of successful track record; foreign shareholding in the bank will be as per existing FDI.
  • Currently, the aggregate foreign investment limit is 74 percent and the licensing window will b open on tap and applications could be submitted to RBI at any time.
  • Applications will be referred to Standing External Advisory Committee to be set up by RBI is 10 months from the date when in principle approval was granted and lapse automatically.

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