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Monday 29 August 2011

RBI issues Guidelines for New banking licences for corporates

(i) Eligibility: Entities / teams within the personal sector, owned and controlled by residents, with diversified possession, sound credentials and integrity and having successful diary of a minimum of ten years are going to be eligible to market banks. Entities / teams having vital (10% or more) income or assets or each from property construction and / or broking activities individually or taken along within the last 3 years won't be eligible.
(ii) company structure: New banks are going to be originated solely through an entirely owned Non-Operative Holding Company (NOHC) to be registered with the Reserve Bank as a non-banking finance company (NBFC) which is able to hold the bank in addition as all the opposite money firms within the promoter cluster.
(iii) Minimum capital demand: Minimum capital requirement are going to be Rs five hundred crore. Subject to the present, actual capital to be brought in can rely on the business set up of the promoters. NOHC shall hold minimum four-hundredth of the paid-up capital of the bank for a amount of 5 years from the date of licensing of the bank. Shareholding by NOHC in far more than four-hundredth shall be brought all the way down to two hundredth at intervals ten years and to fifteen at intervals twelve years from the date of licensing of the bank.
(iv) Foreign shareholding: the combination non-resident shareholding within the new bank shall not exceed forty ninth for the primary five years once that it'll be as per the extant policy.
(v) company governance: a minimum of five hundredth of administrators|the administrators} of the NOHC ought to be freelance directors. the company structure ought to be such that it doesn't impede effective supervision of the bank and also the NOHC on a consolidated basis by the Reserve Bank.
(vi) Business model: ought to be realistic and viable and may address how the bank proposes to realize money inclusion.
(vii) alternative conditions:• The exposure of bank to any entity within the promoter cluster shall not exceed 100 percent and also the combination exposure to any or all the entities within the cluster shall not exceed two hundredth of the paid-up capital and reserves of the bank.• The bank shall get its shares listed on the stock exchanges at intervals 2 years of licensing.• The bank shall open a minimum of twenty fifth of its branches in unbanked rural centres (population upto nine,999 as per 2001 census)• Existing NBFCs, if thought-about eligible, is also permitted to either promote a replacement bank or convert themselves into banks.
(viii) In respect of promoter teams having four-hundredth or a lot of assets / income from non-financial business, sure further necessities are stipulated
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