RBI issues fresh guidelines -- Big business barred from banking foray

The Reserve Bank of India (RBI) has issued fresh guidelines on the entry of private sector into the banking sector.

As per the guidelines, large business houses have been barred from promoting banks. The initial minimum paid-up capital has been set at Rs 200 crore which has to increase to Rs 300 crore within three years of starting business. Other guidelines include that the promoter's contribution shall be a minimum of 40 per cent of the paid-up capital and a minimum capital adequacy ratio of 10 per cent. The new guidelines allow the conversion of NBFCs into banks, subject to the same conditions.