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Rs. 1,000 cr minimum capital mooted for holding company of new bank


Banks and institutions have suggested to the Reserve Bank of India (RBI) that the minimum capital required for the proposed non-operative holding company (NOHC) of new banks in the private sector should be Rs. 1,000 crore instead of Rs. 500 crore.

The RBI released on Tuesday the gist of comments and suggestions received on the draft guidelines for ‘licensing of new banks in the private sector’, which were placed on its website on August 29, 2011. The RBI said it would take these suggestions / comments into account while finalising the guidelines.

There were suggestions that the time for dilution of promoter shareholding (to 40 per cent in the bank) should be increased from 2 years to 3-5 years. There were suggestions that the the process of dilution should be done in a staggered way over a period of 15 years. “Certain parties suggested that the schedule for dilution of promoters’ shareholding should be reckoned from the date of commencement of business instead of date of licensing of the bank,” said RBI.

On foreign shareholding in the bank, some institutions felt that it should not be restricted in the new banks and be permitted up to a level of 74 per cent. A few business houses, NBFCs and a federation felt that restricting foreign shareholding to 49 per cent for initial 5 years was not a deterrent. Further, a federation suggested that 5 per cent cap for non-resident individual/ group was passive and that it would be important to raise the limit from 5 per cent to 25 per cent to attract strategic investors and bring synergy in banking.

The RBI said that some had suggested that the requirement of the non-operative holding company (NOHC) to be wholly-owned by the promoters might be revisited and diversified shareholding at the NOHC level be permitted to improve corporate governance and avoid regulatory overlap. Certain NBFCs also had suggested that existing non-operative investment/holding companies should be allowed to own / hold shares of the NOHC.

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Printable version | Apr 23, 2018 8:52:33 PM |