12.34          ndian     onom
             Repatriation of funds in FCNR(B) and                          period of five years and which shall be
     NRE accounts is permitted. Hence, deposits in                         brought down to 15 per cent within 12
     these accounts are included in India’s external                       years. Bank’s shares to be listed on the
     debt outstanding. While the principal of NRO                          stock exchanges within three years of the
     deposits is non-repatriable, current income and                       business commencement.
     interest earning is repatriable. Account-holders of               (v) Regulatory framework: The bank to be
     NRO accounts are permitted to annually remit an
                                                                           regulated by the relevant Acts/Statutes/
     amount up to US$ 1 million out of the balances
                                                                           Directives, issued by the RBI and
     held in their accounts. Therefore, deposits in NRO
                                                                           other regulators. The NOFHC shall
     accounts too are included in India’s external debt.
                                                                           be registered as an NBFC with the RBI
     guiDelines for licensing of neW bAnks                                 and will be governed by a separate set of
                                                                           directions issued by the RBI.
     The RBI on February 22, 2013 released the
     Guidelines for ‘Licensing of New Banks in the                    (vi) Foreign shareholding in the bank: Foreign
     Private Sector’. Key features of the guidelines are:                  shareholding upto 49 per cent for the first
          (i) Eligible Promoters: A private sector/public                  5 years after which it will be as per the
                sector/NBFCs/entity/group eligible to set                  extant policy.
                up a bank through a wholly-owned “Non-               (vii) Corporate governance of NOFHC: At
                Operative Financial Holding Company                        least 50 per cent of the Directors of
                (NOFHC)”.                                                  the NOFHC should be independent
         (ii) ‘Fit and Proper’ criteria: A past record of                  directors. The corporate structure should
                sound credentials, integrity and sound                     not impede effective supervision of the
                financial background with a successful                     bank and the NOFHC by RBI.
                track record of 10 years will be required.
                                                                    (viii) Prudential norms for the NOFHC: The
        (iii) Corporate structure of the NOFHC: The                        prudential norms will be applied to
                NOFHC to be wholly owned by the
                                                                           NOFHC on similar lines as that of the
                promoter/promoter group which shall
                hold the bank as well as all the other
                financial services entities of the group.             (ix) Exposure norms: The Bank/NOFHC
        (iv) Minimum             voting       equity        capital        allowed no exposure to the Promoter
                requirements for banks and shareholding                    Group—the bank shall not invest in the
                by NOFHC: The initial minimum paid-                        equity/debt capital instruments of any
                up voting equity capital56 for a bank shall                financial entities held by the NOFHC.
                be Rs. 5 billion. The NOFHC shall                      (x) Business Plan for the bank: The business
                initially hold a minimum of 40 per cent                    plan should be realistic and viable and
                of the paid-up voting equity capital of                    should address how the bank proposes to
                the bank which shall be locked in for a                    achieve financial inclusion.
       56.   The part of ‘Authorised Capital’ (the limit upto which
                                                                      (xi) Additional conditions for NBFCs
             a company can issue shares) which has been actually           promoting/converting into a bank: Existing
             ‘paid’ by the shareholders is known as the ‘Paid-             NBFCs, if considered eligible, may be
             up Capital’ of a company. [For detailed analysis of
             different kind of ‘Capitals’ of a company refer the           permitted to promote a new bank or
             Chapter 14: Security Market in India.                         convert themselves into banks.