RBI meets CII, IBA, bankers on new private bank licence norms

MUMBAI: Taking the process of issuing new private bank licences forward, the Reserve Bank today met stakeholders, including industry body CII, which called for a higher minimum capital requirement of Rs 1,000 crore.

The Confederation of Indian Industry (CII), which was represented by a slew of executives from non-banking lenders, said a lower capital (below Rs 1,000-crore) would result in relatively small banks which could potentially lead to higher risk-taking and more volatile earnings.

"This in turn could result in lack of focus on financial inclusion and defeat the very purpose of this round of licencing," the top chamber said in a statement later.

In a discussion paper floated in August, the central bank had listed pros and cons of keeping minimum capital requirement at a low level of over Rs 300 crore, middle-level of Rs 500 crore and a high level of Rs 1,000 crore.

Stakeholders were given time till September 30 to reply after which the banking watchdog has started meeting them to discuss the finer details.

NBFCs turned out in large numbers for the meet with the likes of Tata Capital, Aditya Birla Financial Services, L&T Finance, Mahindra & Mahindra Finance, Indiabulls Finservice, Sriram Transport and Magma Fincorp, among others, meeting RBI officials.

While RBI also met bankers from SBI, ICICI Bank, Bank of Baroda, Union Bank of India, among others, none of them could be contacted for comments after the meet.