Bank window opens for India Inc

Corporates, conglomerates — whether in the public or private sectors — as also non-banking financial companies (NBFCs) can now apply for a banking licence using a non-operative financial holding company (NOFHC) structure. The Reserve Bank of India (RBI), which issued final guidelines for new banks on Friday, refrained from restricting entities that had a significant presence in the real estate and broking sectors from setting up a bank although it had put in some caveats in the draft guidelines. The central bank, which appears to have conquered its fears of ‘self-dealing’, will cherry-pick prospective bankers checking out if their “credentials and integrity” are sound; it has stipulated that the new bank cannot have any exposure — whether credit or investments in debt or equity — to the “promoters, group entities or individuals associated with the promoter group or the NOFHC” and will count on feedback from investigative and tax agencies to issue licences on a “very selective basis”.

The NOFHC must hold a minimum of 40% of the paid-up equity capital of the bank for five years with the stake being pared to 15% within 12 years, the RBI said. While the minimum initial capital needed to set up a bank of R500 crore is relatively small and will lower entry barriers, the condition that 25% of the branches need to be located in unbanked areas is a tough one and will favour large promoters with deep pockets. The mandatory presence in rural

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