Stiff Checklist For Lab Applications

The checklist contains some 20 sets of information being sought by the RBI. A few of them are stiffer than the Sebi stipulations for an IPO, said a prospective applicant.

The new checklist was recently issued by the RBI after the central bank officials found quite a few applications hardly had the desired information on various counts.

In fact many applicants who have submitted their application, seeking licence to set up a local area bank, had a tough time preparing it as no format was available nor was there was any indication on the information needed to be provided, an RBI official said.

 

Confirming this lacunae an ex-RBI official said, the new checklist will ensure that only those who are serious and have definite plans file applications while weeding out undesirable elements at the initial stage itself.

One of the information sought to be incorporated by the apex bank in the application itself was whether the promoter faces any criminal prosecution or were there any cases against any institution or company with which the promoters are associated.

The other information sought pertains to tax defaults of all sorts be it overdue liability or otherwise and also whether there are any outstanding litigations, civil cases pending arbitration proceedings against any of the promoter.

The RBI has asked applicants to furnish details of aborted ventures if any and their credit rating.

Names of the bankers, the promoters and their group companies, and quality of accounts are the other information that should accompany the application.

The apex bank has also directed applicants to ensure they provide a detailed report on the current status of their financial transactions with banks and financial institutions.

We want to ensure that only those serious about setting up a bank and having a solid background seek the licence for a LAB, an RBI official said.

With consultants sprouting around like mushrooms to help prospective applicants we have decided to be as strict as possible to ensure quality not quantity prevails even in the filing of applications so that the RBI can scrutinise them on merit rather than launching a roving inquiry to find out the factual position, the official added.