The Economic Times | 7th May, 2021
Legal experts have reached out to the Reserve Bank of India (RBI) and sought clarity around the eligibility criteria to apply for both universal and small-bank licences, Clarity is being sought on the implementation of recommendations of an internal working group (IWG) constituted by the RBI and its possible impact on the current application process.
IWG had made two recommendations on citizenship and minimum paid capital, which if accepted by the RBI could lead to the rejection of some applications. IWG recommended that the applicants must be “citizen” of India. The current guidelines allow the applicant to be a “resident of India. Apart from that, the working group also recommended changes to minimum paid-up voting equity capital of Rs 1,000 crore instead of Rs 500 crore.
“A recent application received by RBI had an NRI as a promoter. Is there a change in guidelines for the application of universal bank guidelines and even non-residents are allowed to apply as promoters?” according to a legal expert. People with direct knowledge of the matter said in the last few months several meetings have taken place at different levels with RBI officials and experts representing certain banks. A person in the know said that the finance ministry has also been briefed. “Anyone can apply. We cannot stop people from applying. But applications will only be accepted keeping India’s best interest in mind.” a person close to the finance ministry said. The RBI did not respond to ET’s queries.
Industry trackers say that the RBI doesn’t have to accept the IWG recommendations. The report given by IWG is by way of recommendations only and does not override the existing guidelines. But it may be prudent for RBI to decide whether those recommendations are acceptable or not and in what form and to what extent as the same has a huge bearing on the eligibility criterion,” said Rajesh Narain Gupta, Managing Partner, SNG & Partners, a law firm.