RBI clarifies rules for new bank licences

MUMBAI (Reuters) - The Reserve Bank of India (RBI) said on Monday in a clarification to queries on new bank licences that the validity of in-principle approval for new banks has been extended to 18 months from one year.

The RBI issued guidelines in February allowing any type of company to set up a bank in India, paving the way for a new set of private banks since the formation of Yes Bank in 2004.

Applicants must take approval from other regulators to bring in entities regulated by them under the bank holding company, the RBI said.

The central bank also said applicants must have public shareholding of at least 51 percent.

For conglomerates, only non-financial services companies and non-operative financial holding companies will be allowed to hold shares of the bank holding company.

The central bank's move to issue licences is intended to increase banking penetration in a country where only about half of the population has access to banking services. India has about one-fourth the ratio of branches to adults compared with Brazil. (Reporting by Shamik Paul, Swati Pandey and Swati Bhat; Editing by Prateek Chatterjee)