New banks may need Rs 1,000 crore

The Reserve Bank of India (RBI) is set to release the draft licencing norms for new private banks in the next few days, with wide-ranging conditions that would include a minimum net worth of Rs 1,000 crore for companies to be eligible to set up banks in India. The central bank, however, is unlikely to push through with issuing final licences to new banks until such time as the Parliament approves the Banking Laws (Amendment) Bill 2011.

A parliamentary standing committee is examining the bill which was introduced in Lok Sabha in March.

Sources, who did not wish to be identified, said the Bill may come up in parliament only in the winter session.

IFCI Ltd, Srei Infrastructure Finance Ltd, Religare Enterprises Ltd, Shriram Transport Finance Co Ltd, L&T Finance Ltd, Bajaj Finserv Ltd, Indiabulls Financial Services Ltd, and Reliance Capital Ltd are among those who are keen to set up banks.

The bill, when legislated, will empower RBI to dismiss a bank’s board and force its reconstruction to protect the interests of depositors, shareholders and employees. It will allow RBI to seek details of associate enterprises of banking companies.

“Passing the bill is necessary before guidelines for new bank licences are finalised,” said a finance ministry official, who did not wish to be identified.

HT Correspondent, Hindustan Times
New Delhi, August 22, 2011