Mumbai: The Reserve Bank today said many corporates interested in entering banking have called for doing away with the requirement of promoters wholly owning the proposed non-operative holding company (NOHC).
“Doing so will diversify the shareholding structure of the NOHC and will improve corporate governance and avoid regulatory overlap,” the RBI said in a release attributing the view to business houses, NBFCs and a federation.
The RBI today released a gist of the comments and suggestions received by it following the issuance of draft guidelines on banking licences, which was to come in by last August.
In the draft guidelines, RBI had said promoters would be permitted to set up a new bank only through a wholly-owned NOHC which will hold the bank as well as all other financial services companies regulated by RBI or other regulators.
Among other responses, some institutions sought raising foreign holding in a bank to 74 percent from 49 percent in the draft guidelines, the RBI said.
Additionally, suggestions were also made on the timeframe by which the promoter has to dilute its stake in a new bank, the RBI said.
“The time for dilution of promoter shareholding to 40 percent in the bank should be increased from two years to three to years horizon,” the RBI said, quoting the responses.
On the issue of corporate governance, especially regarding the issue of potential conflict of interest, some infrastructure companies suggested that infra business should be allowed to be run outside the bank, it said.
“They also suggested that on infrastructure companies getting converted into banks, exemption from CRR, SLR, priority sector lending etc., should be granted in the initial years,” it says.
Clarity was also sought on stipulations on eligible promoters, clear definition of ‘real estate construction’, ‘well diversified group’ and ‘promoter group’ in the context of eligibility criteria.
The RBI had released the draft guidelines last year following a budget announcement by the finance minister in 2010 which said new banks will be welcomed.
A host of entities, including corporate houses and existing non-bank lenders, among others, have evinced interest in entering the banking fray which is said to be a very profitable business.