New bank licences: CIC structures of large groups on RBI's watch list

The RBI's stance on CIC structures is to be read along with its discomfort with leverage through the pledge of shares.

Large conglomerates’ compliance with the Reserve Bank’s guidelines on core investment companies (CICs) may receive closer scrutiny ahead of the grant of banking licences.

The banking regulator’s August 13, 2020, circular had said the number of layers of CICs within a group (including the parent CIC) is to be restricted to two — irrespective of direct or indirect holding — and has to be adhered to by end of March 2023.

“The equity holding structure in banks is straight forward. In the case of non-banking financial companies (NBFCs), it’s not so. You can’t have a situation wherein banks start mirroring NBFCs on