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.