FinMin sends views on banking permits to Reserve Bank

With the finance ministry sending its comments to the Reserve Bank of India (RBI), the final norms on fresh banking licences may soon be announced.

According to sources, the ministry wants a key change in RBI’s draft guidelines. It wants to remove a clause that bars promoters of real estate and stock broking firms from applying, said those in know of the development.

Sources added the clause was not needed as RBI has already talked of ring-fencing banks. The ministry has also asked the central bank to define the terms promoter and promoter groups more clearly.

The comments also included permitting non-operative financial holding companies (NOFHC) to apply for bank licences rather than non-operative holding companies and the capital adequacy norms for and NOFHC. Parliament had passed the Banking Laws (Amendment) Bill last month, empowering RBI to supersede an errant board of directors and paving the way for issuance of new licence.