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Clarifications to Queries on Guidelines for Licensing of New Banks in the Private Sector
The entities/individuals belonging to the Promoters/Promoter Group, which would participate in the voting equity shares of the NOFHC, would have to provide theMemorandum and Articles of Association, financial statements for past ten years and IT returns for last three years, as appropriate, at the time of submission of their application. The last available financial statements in respect of other Group entities, which do not participate in the voting equity shares of the NOFHC will also have to be furnished. The details of the Promoters’ direct and indirect interest in various entities/companies/industries and details of credit/other facilities availed by the Promoters/Promoter Group would be required of all entities. [ para 3 of Annex II to the guidelines]
A. The NOFHC has to be wholly owned by a single Promoter/Promoter Group ( as per the definition given in the Annex I to the guidelines) and the pattern of shareholding would be as per the provisions laid down at para 2 ( C ) ( ii ) & ( iii) of the guidelines. Two or more separate Groups cannot combine together to set up a NOFHC.
A. A Group which does not have any company or which will not be able to have a company with public shareholding of not less than 51 per cent cannot apply for banking licence, since at least 51 per cent of the voting equity shares of the NOFHC have to be held by companies in the Promoter Group, in which public hold not less than 51 per cent of the voting equity shares. If the Promoter Group has a company in which public holding is not less than 51 per cent, at least 51 per cent of the voting equity shares of the NOFHC is required to be held by that company. It is not necessary that all Group companies in which public shareholding is not less than 51% should be shareholders of the NOFHC [para 2 (C) (ii)(b) of the guidelines].
A. No. No non-resident shareholder, directly or indirectly, individually or in group through subsidiary, associate or joint venture will be permitted to hold 5 per cent or more in the paid up voting equity capital of the bank for a period of 5 years from the commencement of the business of the bank. [ para 2 (F) of the guidelines ]
A. No.It is not envisaged that all the companies in the Promoter Group have to set up the wholly owned NOFHC. As provided in para 2(C)(iii) of the guidelines, only the non-financial services companies/entities and non-operative financial holding companies in the Promoter Group and individuals belonging to Promoter Group, conforming to the stipulation in para 2(C)(ii)(a) and (b), will be allowed to hold the shares of NOFHC. Further, para 2(C)(vii) requires that all the regulated financial services entities, in which the Promoter Group has ‘significant influence’ or ‘control’, (as defined in Accounting Standard 23) shall be held by the NOFHC, and that, such entities cannot hold shares in the NOFHC [para 2 (C) (iii) & (vii)].
A. The Promoters/Promoter Group cannot set up a bank directly. They have to first set up a wholly owned NOFHC, which will hold the bank and other regulated financial services entities/companies in which the Promoter Group has ‘significant influence’ or ‘control’ (as defined in Accounting Standard-23).NOFHC could be set-up with equity participation by a sub-set of non-financial services companies/entities/individuals and non-operative financial holding companies in the Promoter Group provided the equity participation is in conformity with the stipulation at para 2 (C) (ii) of the guidelines.
A. The Promoters/Promoter Group have to first set up a wholly owned NOFHC for holding the bank. They cannot set up a bank directly. In case, some entities/companies in the Promoter Group having ‘significant influence’ or ‘control’ (as defined in Accounting Standard-23) in regulated or unregulated financial services activities do not wish to participate in the voting equity of the NOFHC, they can do so. However, the regulated financial services entities, in which the companies in the Promoter Group have ‘significant influence’ or ‘control’ (as defined in Accounting Standard-23), have to come under the NOFHC. The unregulated financial services activities/entities of the Promoter Group cannot come under the NOFHC. [para 2 (C) (i), (ii), (iii) & (vii) of the guidelines]
A. Yes. All the regulated financial services entities in which the Promoter Group has ‘significant influence’ or ‘control’ (as defined in Accounting Standard 23) will have to be brought under the NOFHC as subsidiaries, or associates or joint ventures. [para 2 (C) (iii) & (vii) of the guidelines]
A. The overall track record of the Promoters/Promoter Group for at least 10 years will be seen in all its activities both financial and non-financial. If some, but not all, companies forming part of the Promoter Group have been in existence for less than 10
A. The requirement that Promoters / Promoter Group should have a past record of sound credentials and integrity as a part of ‘Fit and Proper’ criteria is a matter of overall judgment and no indicative criteria can be spelt out. [para 2 (B) of the guidelines]
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Page Last Updated on: December 11, 2022
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