Those applying to set up private banks may be allowed to have overseas investment to the tune of 74% right at the beginning rather than five years later, a move that will help aspirants meet stringent capital norms.
The 'on-tap' application window is likely to open for a period of one month in July with an empowered committee screening applications, said a senior official who didn't want to be named.
The government and the Reserve Bank of India (RBI) are giving final shape to the licensing guidelines, he said. RBI granted approvals for new banks in the private sector in 2014, the first time it did so in a decade.
These went to IDFC Ltd and Bandhan Financial Services. The foreign investment limit was capped at 49% for the first five years. Private sector banks in India can have overseas shareholdings of up to 74% under existing foreign investment guidelines.
These went to IDFC Ltd and Bandhan Financial Services. The foreign investment limit was capped at 49% for the first five years. Private sector banks in India can have overseas shareholdings of up to 74% under existing foreign investment guidelines.
If the starting limit is relaxed, this may cover the new banks as well.
"The foreign investment issue is being discussed. We do not want those who were awarded licences in 2014 should be shortchanged. It is being looked at," the official said. The current thinking is that the window for applications should be opened every year in July for one month. Other amendments are also under consideration, the official said.
"There are some other changes that are being looked at from the previous experience, which include the promoter's stake in the Non-Operative Financial Holding Company (NOFHC) structure but all these are at early stages of deliberation," the person said.
Without getting into specific details, an RBI spokesperson said the guidelines are a work in progress.
As part of its differentiated banking and financial inclusion push, the central bank last year gave inprinciple approval to 11 applicants for payments banks and 10 for small finance banks.
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