A recent press report said that the Finance Ministry has sent its views to the RBI on granting new banking licences. The views were in favour of granting new licences to the industrial houses, provided the bank will be a separate entity.
The report also said that in the discussion paper on ‘Entry of New banks in the private sector’ there were six issues such as minimum capital requirements, promoters contribution, FDI limit, permission for industrial houses to promote banks, permission to NBFCs to convert itself into banks and the business model were discussed.
Further the press report also said that as per FDI policy, at least 26 per cent of the paid-up capital of private sector banks will have to be held by residents, except for wholly-owned subsidiary of a foreign bank.
The report also said that the aggregate foreign investment from all sources including FDI, NRI and FII in private sector banks should not exceed 74 per cent of the paid-up capital of the bank. Further, for the discussion paper there were oppositions to the discussion paper that the industrial houses may divert funds from banks they promoted. But now, with the current view of separate entity for banking operations has addressed the above opposition as per the press report.
There is an option for lower interest rates, variety of loans such as home loan, personal loan, car loan, business loan etc. and deposits if industrial houses are given licence for banking operations.