'Hike minimum investment limit for bank licence to Rs 1,000 cr'
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'Hike minimum investment limit for bank licence to Rs 1,000 cr'

Last Updated: Monday, January 07, 2013, 21:23
 
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'Hike minimum investment limit for bank licence to Rs 1,000 cr'
New Delhi: Minimum investment limit for obtaining a bank licence should be pegged at Rs 1,000 crore with the stipulation that promoter should bring in the amount within a period of five years, said industry chamber Assocham.

The RBI, in its draft report on new bank licences has stipulated a minimum investment of Rs 500 crore for getting a bank licence. The central bank is currently working on the final guidelines for new bank licences.

"Considering the heavy investment needed for technology up gradation for the future purposes, there can be a stipulation suggesting that minimum capital requirement shall be hiked to Rs 1,000 crore from Rs 500 crore within five years of starting the bank. This can help to ensure only serious and resourceful entities are eligible to apply," it said in a statement.

It said that new banks may have to invest heavily in technology and to take steps to achieve financial inclusion and to scale up the operations on viable lines over time.

On the matter of foreign shareholding in the bank, the chamber welcomed the cap of 49 percent for the first five years.

However, it said to help foreign shareholders to form their long-term investment decisions, there is a need for clarity on what would be the status of limit of FII holding after first five years.

It also said the mandatory requirement of new bank to get listed within two years of licensing is not pragmatic and feasible and the time period should be increased to five years.

Further, it added that there should be some method by which the banks are compensated suitably for the lower profitability from the branches in unbanked areas.

PTI


First Published: Monday, January 07, 2013, 21:23


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