Reserve Bank of India (RBI) decided to extend the validity period of the in-principle approval for setting up a banking business from one year to 18 months.
The central bank announced this decision in a recent clarification on the draft banking license norms issued some months ago.
According to the original norms, the in-principle approval is valid upto 12 months and if the licensee is unable to set up a bank within this period, it would lose license. The central bank, however, declined any relaxation on meeting priority-sector obligations.
The prospective licensees sought clarity on whether RBI would provide more time for a smooth transition from the existing structures to that prescribed in the guidelines, as also to meet regulatory requirements.
The central bank also clarified that it would consider the track record of all group companies, including non-financial ones while vetting the applications.
The clarification from RBI has, however, not shed any light on banking aspirants that have insurance subsidiaries.
RBI also ruled that individuals could not form a holding company structure to launch a bank, as the final guidelines clearly specified that an entity must have a successful track record of 10 years.
Leave a Reply
You must be logged in to post a comment.