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प्रेस प्रकाशनी PRESS RELEASE
संचार �वभाग, क
कायार्लय , एस .बी .एस .मागर् , म
ु ंबई-400001 _____________________________________________________________________________________________________________________ DEPARTMENT OF COMMUNICATION , Central Office, S.B.S.Marg, Mumbai -400001
फोन/ Phone: 91 22 2266 0502 फै क् स/Fax: 91 22 22660358
भारतीय �रज़वर् ब �क
RESERVE BANK OF INDIA
0वेबसाइट : www.rbi.org.in/hindi
Website : www.rbi.org.in
इ-मेल email: email@example.com
May 05, 2016
RBI releases “ Draft Guidelines for ‘on tap’
Licensing of Universal Banks in the Private Sector”
The Reserve Bank of India today released on its website, “
Draft Guidelines for
‘on tap’ Licensing of Universal Banks in the Private Sector” . It has sought
views/comments on the draft guidelines from banks, non- banking financial
institutions, industrial houses, other institutions and the public at large. Sugg estions
and comments on the draft guidelines may be sent by June 30, 2016 to the Chief
General Manager, Reserve Bank of India, Department of Banking Regulation, Central
Office, 13h floor, Central Office Building, Shahid Bhagat Singh Marg, Mumbai -
400001. Suggestions/comments can also be emailed by
Final guidelines will be issued and the process of inviting applications for
setting up of new universal banks in the private sector will be initiated after receiving
feedback, comments and suggestions on draft guidelines.
In a departure from the earlier guidelines on
universal banks dated February
22, 2013, the present guidelines include (i) resident individuals and professionals
having 10 years of experience in banking and finance as eligible persons to promote
universal banks; (ii) large industrial/business houses are excluded as eligible entities
but permitted to invest i n the banks to the extent of less than 10 per cent; (iii) Non -
Operative Financial Holding Company (NOFHC) has now been made non- mandatory
in case of promoters being individuals or standalone promoting/converting entities
who/which do not have other group entities; (iv) The NOFHC is now required to be
owned by the promoter/promoter group to the extent of at least 51 per cent of the
total paid- up equity capital of the NOFHC, instead being wholly owned by the
promoter group; and (v) Existing specialised activi ties have been permitted to be
continued from a separate entity proposed to be held under the NOFHC subject to
prior approval from the Reserve Bank and subject to it being ensured that similar
activities are not conducted through the bank as well.
Key fea tures of the guidelines:
(I) Eligible Promoters
(i) Existing non- banking financial companies (NBFCs) that are ‘controlled by
residents’ and have a successful track record for at least 10 years.
(ii) Individuals / professionals who are ‘residents’ and have 10 years of
experience in banking and finance.
(iii) Entities / groups in the private sector that are ‘owned and controlled by
residents’ [as defined in FEMA Regulations, as amended from time to time]
and have a successful track record for at least 10 years, provided th at if such
entity / group has total assets of
50 billion or more, the non- financial
business of the group does not account for 40 per cent or more in terms of
total assets / in terms of gross income.
(II) ‘Fit and Proper’ criteria
Promoter/promoting enti ty/promoter group should have a past record of sound
financials, credentials, integrity and have a minimum 10 years of successful
(III) Corporate structure
The requirement of Non- Operative Financial Holding Company (NOFHC) is
not mandatory for individual promoters or standalone promoting/converting
entities who/which do not have other group entities. I ndividual
promoters/promoting entities/converting entities that have other group entities,
shall set up the bank only through an NOFHC. The NO FHC shall be owned by
the promoter/promoter group to the extent of not less than 51 per cent of the
total paid- up equity capital of the NOFHC. S pecialised activities would be
permitted to be conducted from a separate entity proposed to be held under
the NO FHC subject to prior approval from the Reserve Bank and subject to
being ensured that similar activities are not conducted through the bank.
(IV) Minimum capital requirement
The initial minimum paid -up voting equity capital for a bank shall be
Thereafter, the bank shall have a minimum net worth of
5 billion at all times.
The promoter/s and the promoter group/NOFHC, as the case may be, shall
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 from the date of
commencement of business of the bank. The promoter group shareholding
shall be brought down to 15 per cent within a period of 12 years from the date
of commencement of business of the bank.
(V) Foreign shareholding in the bank
The foreign shareholding in the bank would be as per the existing foreign
direct investment (FDI) policy subject to the minimum promoter shareholding
requirement indicated in paragraph (IV) above. At present, the aggregate
foreign investment limit is 74 per cent.
(VI) Corporate governance prudential and exposure norms
The bank shall comply with the provisions of Banking Regulations Act, 1949
and the existing guidelines on prudential norms as applicable to scheduled
commercial banks . The bank is precluded from having any exposure to its
promoters, major shareholders who have shareholding to the extent of 10 per
cent or more of paid -up equity shares in the bank, the relatives of the
promoters as also the entities in which they have significant influence or
(VII) Business plan for the bank
The business plan submitted by the applicant should be realistic and viable
and address how the bank proposes to achieve financial inclusion.
(VIII) Other conditions
The bank shall get its shares listed on the stock exchanges within six years of
the commencement of business by the bank.
The bank shall open at least 25 per cent of its branches in unbanked rural
centres (population up to 9,999 as per the latest census). The bank shall
comply with the priority sector lending targets and sub- targets as applicable to
the existing domestic scheduled commercial banks. The board of the bank
should have a majority of independent directors.
(IX) Procedure for application
• The licensing window will be open on- tap, and the applications in the
prescribed form along with requisite information could be submitted to the
Reserve Bank at any point of time.
• The applications will be referred to a Standing External Advisory Committee
(SEAC) to be set up by the Reserve Bank.
• The Committee will submit its recommendations to the Reserve Bank for
• The decision to issue an in- principle approval for setting up of a bank will be
taken by the Reserve Bank.
• The validity of the in- principle approval issued by the Reserv e Bank will be 18
months from the date of granting in -principle approval and would thereafter
• The Reserve Bank’s decision in this regard will be final.
• In order to ensure transparency, the names of the applicants for bank licences
and the names of applicants that are found suitable for grant of in- principle
approval will be placed on the Reserve Bank’s website periodically.
It may be recalled that the Reserve Bank of India (RBI) had last issued
guidelines for licensing of new banks in the private sector on February 22, 2013
Consequently, the Reserve Bank issued in- principle approval to two applicants and
they have since established the banks.
Recognising the need for having an explicit policy on banking structure in India
in line with the recommendations of the Narasimham Committee, Raghuram G.
Rajan Committee and other viewpoints, the Reserve Bank came out with a policy
discussion paper on
Banking Structure in India – The Way Forward on August 27,
2013. After a thorough examination of the pros and cons, the discussion paper made
out a case for reviewing the current ‘Stop and Go’ licensing policy and for considering
a ‘continuous authorisation’ policy on the grounds that such a policy would increase
the level of competition and bring new ideas into the system. The feedback on the
discussion paper broadly endorsed the proposal of continuous authorisation with
adequate safeguards. The first Bi -monthly
Monetary Policy Statement 2014- 15
announced on April 1, 2014, among other things, then indicated that after issuing in --
principle approval for new licences, the Reserve Bank will start working on the
framework for on- tap licensing as well as differentiated bank licences, Building on the
Discussion Paper and using the learning from the recent licensing process, such as,
the experience of lice nsing two universal banks in 2014 and granting in- principle
approvals for Small Finance Banks and Payments Banks, the Reserve Bank has now
worked out the framework for granting licences to universal banks on a continuous
P ress Release : 2015 -201 6/2581 Principal Adviser