Banking aspirants line up with clarifications on licence norms

Clarifications range from issues such as the details to be provided in the licence application forms and the exact time period that RBI might take in grant of licences

Aspiring to set up banks, at least 50 entities have begun the process of approaching RBI to seek clarifications on the norms prescribed by the central bank for issue of new banking licences.

 

The clarifications range from procedural issues like the details to be provided in the licence application forms, issues concerning the exact time period that RBI might take in grant of licences, whether the applicants can be given a provisional licence and then be allowed to meet all the requisite norms to get a final banking licence.

 

Sources said that at least 50 entities have already shown initial interest in applying for a bank licence and have hired consultants to help file their applications. However, it is very unlikely that more than 4-5 licences would be granted.

 

While RBI issued the final guidelines for grant of new bank licences on February 22, it later said that applicants can seek clarifications on these norms till April 10.

 

Senior executives at many of the aspiring applicants said that they have listed out the clarifications to be sought from the RBI, but most of the entities plan to submit them to the central bank on April 9-10 to guard their plans from rivals.

 

For the time being, the consultants that include many former bank chiefs and other senior bankers are in high demand as all the aspirants are rushing to consult them on the contours of the clarifications they need to get before applying for a licence, one of such senior bankers said.

 

Interestingly, a large number of real estate players have shown initial interest despite their financial positions not being entirely in adherence to the norms spelt out by the RBI, the consultants said on condition of anonymity.

 

A large number of business groups such as Anil Ambani-led Reliance Group, L&T, Mahindras, Birlas, Religare and Videocon have already made public their intentions to apply for the licence, while many NBFCs including Shriram group, Indiabulls, India Infoline, IFCI and PFC have also shown interest.

 

After April 10, RBI would make public the clarifications and its response to them, although the identity of those who raise queries would be kept confidential.

 

The aspirants would need to apply for the licences till July 1, after which RBI will make their names public.

 

The new guidelines allow any entity -- be it a private or government owned-- having its roots in any sector, including brokerages and realty, to apply for a banking licence.

 

The RBI will, however, go by 'fit and proper' criteria, which will include having a past record of sound credentials and integrity and financial soundness with a successful track record of 10 years, while giving licences. Many aspirants are also seeking clarifications on the 'fit and proper' criteria especially on issues that date back to more than a decade.

 

Other requirements include a initial capital of Rs 500 crore to be brought in by the promoter. RBI last gave bank licences around a decade back.