Rbi Receives 8 Reports For Local Area Banks

The project reports include details on the initial contribution by promoters and the manner in which the minimum share capital of Rs 5 crore will be raised.

The apex bank is examining these proposals and is expected to arrive at a decision soon. The local area banks are being set up to provide institutional mechanisms for promoting rural savings, besides providing credit for viable economic activities in the areas.

Under the norms, the lendings of these banks will be to agriculture and allied activities, small-scale industry, agro-industrial activities, trading activities and the non-farm sector with a view to ensuring the provision of timely and adequate credit to the local clientele in the area of operation. Apart from the eight firm proposals, the central bank has received 10 intentions for setting up local area banks.

 

Garware Synthetics will presently make a presentation to the RBI for setting up such a bank.

A senior official of the company said, "We will shortly apply to the RBI for this purpose." The bank is proposed to be set up at Aurangabad as the company has a large part of its business in that area, the official said.

"We are looking at the possibilities of a tie-up with other agencies for setting up the bank," he said.

The promoters' contribution for the banks will have to be at least Rs 2 crore of the minimum paid-up capital of Rs 5 crore.

These banks will have to observe the priority sector lending targets at 40 per cent of the net bank credit as applicable to other domestic banks.