The curious case of new bank licenses
By Joseph Samson
Jan 10, 2011
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The discussion paper let out by Reserve Bank of India regarding has bagged diverse opinions from different opinion sects. The topic of discussion being a sensitive ones, the apex bank is bound to face oppositions despite the utmost controlled measures taken by it in framing the policy.

Currently majority of share in the banking domain is held by public sector banks. Then come the private sector banks followed by foreign lenders and cooperative banks.

In a bid to allow corporate houses to set up banks in the country, a question arises as to how much can the idea be banked upon?

The promoters' background is something which will be checked majorly. Latest technology, higher capital and related factors will not be the only governing criteria while affirming the background of the promoter.

The discussion paper however dealt only with broad issues like minimum capital requirements and promoters' contribution; minimum and maximum caps on promoters and other shareholders; foreign shareholding; whether industrial and business houses could be allowed to promote banks; whether NBFCs be allowed to or be converted to a bank; and business model for the new bank.

Seeing the varied opinions received on the issue, the apex bank has decided to set up an independent expert group for the purpose which will scrutiny the matter in detail and recommend eligible applications to RBI.


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