RBI issues bank licence norms, bars conglomerates

RBI had granted licenses to Yes Bank and Kotak Mahindra Bank in 2004

The Reserve Bank of India (RBI) on Monday released guidelines for 'on tap' licensing of universal private sector banks under which the applicants can apply for a banking licence anytime as opposed to a limited-period window that the central bank previously used to open for applications.

The released guidelines states individuals with 10 years senior-level experience are eligible to promote a bank, but large industry houses have been excluded as eligible entities. The large industry houses, however, can invest up to 10 per cent.

Apart from this, the universal bank has to list on exchanges within six years of business commencement and must have realistic and viable business plan.

It must address financial inclusion and must open at least 25 per cent branches in unbanked rural centres.

In-principle nod for bank will be valid for 18 months from date of grant.

Earlier in 2004, the RBI had granted licenses to Yes Bank and Kotak Mahindra Bank.

After Raghuram Rajan took over as central bank governor, he opened the banking license window once again after which IDFC Bank and Bandhan Bank were issued license and it was announced that an 'on-tap' license regime would be introduced.