The Reserve Bank of India is likely to double the capital requirement for new banks

New Delhi: An internal committee of the Reserve Bank of India has recommended that the initial capital and net worth requirements be almost doubled to be eligible for a banking license, to ensure that entities holding a license for private banks required, remain adequately capitalized.

The PK Committee’s working committee recommended that the minimum initial capital requirement for the establishment of a new universal bank could be increased to 1000 million, while that of the small finance bank (SFB) could also be increased to 300 million.

Under the on-tap license granted by the RBI for these categories, the current initial capital requirement for a universal bank is 500 million and that of SFB 200 million.

The committee also recommended raising the initial paid-up share capital for voting banks (UCBs) which would be transferred from current R100 to 150 RN to SFBs, which he said should be increased to 300 million within five years. .

“As the licensing guidelines have now been continued (on-tap), the Reserve Bank may introduce a system to review the initial paid-up share capital / net worth requirement for each category of banks once in five years,” the committee said in its report which Was announced Friday night by the RBI.

The committee also recommended that SFBs be listed within six years from the date on which the net worth is reached, equal to the general requirement for access to capital prescribed for universal banks’ or ‘ten years from the start date’, which also all the first is.

The list for existing small finance banks and payment banks is said to be ‘within six years from the date on which the net value of Rs 500 million was reached’, or ‘ten years from the start date’, depending on the previous one.

The committee said universal banks should be listed within six years of starting their operations.

Source: Gulf News

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