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Money > Business Headlines > Report April 6, 2001 |
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Corporates chary of floating banksBS Banking Bureau No corporate has moved the Reserve Bank of India for a licence to float the second lot of new private banks. The deadline for seeking a licence expired on March 31, 2001. The central bank has allowed big industrial houses to take a 10 per cent stake in new banks. According to RBI sources, the bank has received only two applications - from Kotak Mahindra Finance Ltd and RaboBank. "There have been a few other applications as well, but none of them seems to be serious about floating a bank," sources said. The RBI is likely to issue the licences by June 30. This trend is in stark contrast to the first lot of applicants, which included the Tatas, the Birlas and the Ambanis among other top notch corporates. "Big industrial houses are not interesed in holding only a 10 per cent stake. Unless the central bank raises this limit, there will not be any takers," said a corporate source. The RBI has pegged the initial minimum paid-up capital for a new bank at Rs 2 billion, which will be raised to Rs 3 billion within three years of commencement of business. The minimum capital adequacy ratio has been pegged at 10 per cent. The initial capital, other than the promoters' contribution, could be raised through a public issue or private placement. In case the promoters' contribution to the initial capital is in excess of the minimum proportion of 40 per cent, they are required to dilute their excess stake after one year of the bank's operations. The guidelines also asked for a distant relationship between the bank and any other business entity in the promoter group. Any other company of the group, as per the guideline, will be allowed to invest a maximum 10 per cent of the equity. The new bank will not be allowed to set up a subsidiary or mutual fund for at least three years from the date of commencement of business. The new banks will have to maintain the priority sector lending target of 40 per cent of net bank credit and will be required to open 25 per cent of its branches in rural and semi-urban areas. ALSO READ:
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