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NEW BANKING LICENSE

P R E S E N T E D BY
1.

A B H I L A S H G U P TA

2.

NITIN AWASTHI

3.

KUMAR VIVEK

FACULTY :- MR. NISHANT GARG

3. TO EXTEND THE
GEOGRAPHIC COVERAGE OF
BANKS AND IMPROVE
ACCESS TO BANKING
SERVICES TO MAJORITY OF
PEOPLE IN THE COUNTRY

2. TO INCREASE PRESENCE OF
BANKING SYSTEM IN THE
RURAL ARES

1. TO INFUSE MORE CAPITAL


INTO THE MARKET

THE NEED

HIGHLIGHTS OF THE GUIDELINES


1. Eligible promoters are defined as entities/groups in the private
sector owned and controlled by residents as well as public sector
with sound credentials and integrity and with a successful track
record of 10 years
2. To improve governance and enable ring fencing of financial
services business, new banks are intended to be set-up only
through a wholly-owned Non-Operative Financial Holding Company
(NOFHC).
3. The minimum capital has been pegged at INR 500 crores, with the
promoter NOFHC holding not less than 40% of capital, along with a
5 year lock-in period
4. Progressive reduction of shareholding of promoter NOFHC is
envisaged to restrict it to 40% for the initial 5 year period, to
eventually 15% within 12 years
5. Initial foreign shareholding has been restricted to 49% for the first
5 years
6. To improve corporate governance, the Board is envisaged to have
minimum of 50% independent directors.
7. Existing NBFCs can promote a new bank or convert themselves in
to a bank

CRITICAL CONSIDERATION
1. Setting up NOFHC with the appropriate shareholding and governance
structure that will meet RBI requirements. Strong pedigree of the top
management and independent directors
2. Tax implications (direct, indirect, stamp duty) and other considerations
(existing JVs etc.) on transferring of financial services business under
NOFHC
3. Relatively stringent capital adequacy requirement of 13% for 3 years as
well as compulsory opening of 25% branches in unbanked rural centers
may strain the viability and render them uncompetitive against
established players who do not have such restrictions.
4. Establishing a successful track record and profitability within 3 years, in
order to get appropriate valuation at the time of compulsory public
listing
5. Prohibition of opening a new financial services entity by NOFHC for the
first 3 years can result into a disadvantage in the near term for players
who wish to have a wider financial services footprint
6. Existing NBFCs may wish clarification on the conversion of its existing
Tier 1 center branches, as the guidelines have proposed RBI approval
for such branch conversion

APPLICANTS FOR THE BANK LICENSE


Aditya Birla Nuvo Ltd., Mumbai.
Bajaj Finserv Ltd., Pune.
Bandhan Financial Services Pvt. Ltd., Kolkata.
Department of Posts, New Delhi.
Edelweiss Financial Services Limited, Mumbai.
IDFC Limited, Mumbai.
IFCI Limited, New Delhi.
Indiabulls Housing Finance Limited, New Delhi.
India Infoline Ltd., Mumbai.
INMACS Management Services Limited, Gurgaon.
Janalakshmi Financial Services Pvt. Ltd., Bangalore.
J M Financial Limited, Mumbai.
LIC Housing Finance Ltd., Mumbai.
L & T Finance Holdings Limited, Mumbai.
Magma Fincorp Limited, Kolkata.
Muthoot Finance Limited, Kochi.
Reliance Capital Limited, Mumbai.
Religare Enterprises Limited, New Delhi.
Shriram Capital Limited, Chennai.
Smart Global Ventures Pvt. Ltd., Noida.
SREI Infrastructure Finance Limited, Kolkata.
Suryamani Financing Company Limited, Kolkata.
TATA Sons Limited, Mumbai.
Tourism Finance Corporation of India Limited, New Delhi.
UAE Exchange & Financial Services Ltd., Kochi.
Value Industries Limited, Aurangabad.

BANKING LICENSE EVALUATION PROCESS

REASON WHY TATA SONS STEP DOWN FROM BANKING LICENSE


Financial Statements And Credit Information
Applications Should Also Be Supported By Detailed Information On The
Background Of Promoters, Their Expertise, Track Record Of Business And
Financial Worth, Memorandum And Articles Of Association And Latest
Financial Statements Of The Promoter Entities For The Past Ten Years,
Income Tax Returns For Last Three Years, Details Of Promoters Direct
And Indirect Interests In Various Entities/Companies/Industries,
Details Of Credit/Other Facilities Availed By The Promoters/
Promoter Entity(ies)/ Other Group Entity(ies) Along With Details
Of The Banks/ financial institutions branches where such
facilities were / are availed
The Tata Sons Have More Than 1000 Companies In Which They Have
Holdings And It Would Have Been Nearly Impossible For Them To Collect
All The Required Papers For The Criteria To Be Fulfilled And Hence They
Step Down

YAY THEY GOT THE NEW BANK LICENSE

IDFC Limited, Mumbai


Bandhan Financial Services Pvt. Ltd., Kolkata.

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