Corporates with sound credentials can enter banking business, says RBI, issues guidelines
entity will have to comply with the priority sector lending targets and sub-targets as applicable to the existing domestic banks, it said.
Banks promoted by groups having 40 per cent or more income from non-financial business will require RBI's prior approval for raising paid-up voting equity capital beyond Rs 1,000 crore for every block of Rs 500 crore.
The guidelines said the NOFHC will hold the bank as well as all the other financial services entities of the group regulated by RBI or other financial sector regulators.
"The general principle is that no financial services entity held by the NOFHC would be allowed to engage in any activity that a bank is permitted to undertake departmentally," it said.
Commenting on the norms KPMG Partner and head of financial Services Tax Naresh Makhijani said the guidelines are now complete in all respects. RBI is eying entities with deep pockets, impeccable track record and financial inclusion in mind.
According to RBI norms, the NOFHC will initially hold a minimum of 40 per cent of the paid-up voting equity capital of the bank which shall be locked in for a period of five years and which shall be brought down to 15 per cent within 12 years.
The holding company will be registered as a non-banking finance company (NBFC) with the RBI and will be governed by a separate set of directions issued by RBI.
"The NOFHC and the bank shall not have any exposure to the promoter group. The bank shall not invest in the equity or debt capital
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