June 03, 2013
Kalaivaraikalai
The Reserve Bank of India today released on its website, clarifications to queries on the Guidelines for Licensing of
New Banks in the Private Sector.
The Reserve Bank of India released the Guidelines for Licensing of New
Banks in the Private Sector on its website on February 22, 2013. Following the
issue of the guidelines, RBI issued a press release on March 7, 2013 inviting
queries from intending applicants seeking clarifications on the guidelines and
also stated that considering that the clarifications provided would be of wider
interest and use for all intending applicants, the Reserve Bank would post the
clarifications on its website.
In all, RBI has received 443 queries from 34
individuals/ organisations. Upto the end of March 31, 2013, RBI had received 71
queries from 9 individuals/ organisations. As many as 330 queries from 19
individuals/ organisations were received between 5th to 10th April, 2013, of
which 240 queries from 10 individuals/ organisations were received on April 10,
2013, i.e. on the last date. Further, 42 queries were received after April 10,
2013. The clarifications to all the queries have been provided. A few queries
have been clubbed with other related queries for the sake of clarity and
continuity.
A good number of queries have brought out
issues relating to the provisions in the guidelines on the eligible promoters,
‘fit and proper’ criteria, corporate structure of the Non-Operative Financial
Holding Company (NOFHC), foreign shareholding and on transition time to the new
structure. While interpreting the replies, it must be kept in view that though
the replies are specific to the questions, these must be seen in the wider
context of the guidelines.
What’s New:
Validity period of
the in-principle approval
As per the guidelines for licensing of new
banks in the private sector issued vide RBI Press Release dated February 22,
2013, the validity of the in-principle approval for setting up of the NOFHC /
bank was one year from the date of issue and would lapse automatically,
thereafter.
The queries received from intending
applicants brought out several complex issues pertaining to re-organisation of
the existing corporate structure, restructuring of businesses and meeting the
regulatory requirements. In the above context, RBI has been requested to
clarify as to whether it would provide more time for a smooth transition from
the existing structures to that prescribed in the guidelines as also for
meeting the regulatory requirements. It has therefore, been decided to extend
the validity period of the in-principle approval from one year to 18 months.
Accordingly, the provisions at para 4(K) (vi) of the guidelines stand modified.
It is expected that this would provide sufficient time for the
Promoters/Promoter Group to comply with the various stipulations in the
guidelines and the terms and conditions that would be set out while granting
the in-principle approvals to successful applicants.
Applicability of
norms of other regulators
Some of the provisions in the guidelines
relate to Non-operative Financial Holding Company (NOFHC) structure which
envisages holding of the bank and other regulated financial services entities
of the Promoters/Promoter Group under the NOFHC and prudential exposure norms
for the regulated entities. These requirements overlap with regulatory norms
prescribed by other sectoral regulators like SEBI and IRDA. In this regard,
queries were raised on adherence to different sector specific requirements.
Such issues were examined in consultation with SEBI and IRDA. It has been
decided that while the structure prescribed in the guidelines is the preferred
structure, the intending applicants should approach the other financial sector
regulators for bringing the entities regulated by them under the NOFHC. Their
decision in this regard would prevail. Therefore, at the minimum, the proposed
bank and all RBI regulated entities will necessarily be under the NOFHC.
Ajit
Prasad
Assistant General Manager
Press Release :
2012-2013/2022
|
.bmp)
.bmp)
.bmp)
.bmp)
