Corporates with sound credentials can enter banking business, says RBI, issues guidelines

The Reserve Bank, which has laid down an elaborate 'fit and proper' criteria, has not excluded any category like brokerages, real estate companies from entering into the banking space as has been advocated by the Finance Ministry.

The final guidelines pave the way for corporate houses like Anil Dhirubhai Ambani Group, Larsen & Toubro, Tatas, Mahindra and Mahindra, Life Insurance Corporation and Aditya Birla Group to enter the banking business.

"Entities/groups should have a past record of sound credentials and integrity, be financially sound with a successful track record of 10 years," it said.

The minimum paid-up capital for setting up a bank has been pegged at Rs 500 crore.The cap on the foreign investment, including FDI/FII and NRI, has been set at 49 per cent.

As per norms notified by RBI, on receipt of licence, promoter has to start operations within one year and list the company within three years of commencement of the business.

Also, new banks should open at least 25 per cent of branches in unbanked rural centres.

Those seeking to set up a bank would have to submit applications by July 1, 2013. The RBI will display names of applicants on its Website.

Before granting licences, RBI would seek feedback about applicants from other regulators, enforcement, investigative agencies like I-T Department, CBI, ED, as deemed appropriate.

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