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Tax Edge Special - Draft Guidelines for Licensing of New Banks in Private Sector

India

The Reserve Bank of India unveils its Draft Guidelines for Licensing of New Private Sector Banks in India on 29 August 2011, the RBI unveiled its Draft Guidelines for licensing of new banks in the private sector. Taxand India discusses the impact of the new guidelines on banks in the private sector. In the Draft Guidelines the RBI has indicated that certain amendments to the Banking Regulation Act, 1949 are under consideration of the Government of India, including a few which are vital for finalisation and implementation of the policy for licensing of new private sector banks. These vital amendments relate to:

  • Removal of restriction of voting rights
  • Concurrently empowering the RBI to approve acquisition of shares and / or voting rights of 5 percent or more in a bank, to a person whom the RBI considers as 'fit and proper'
  • Empowering the RBI to supersede Board of Directors of a bank, so as to protect depositors' interests
  • Facilitating consolidated supervision

The Final Guidelines will be issued and the process of inviting applications for setting-up new private sector banks will be initiated only after the BRA is amended for the above.

 

Taxand's Take

For more detail on Taxand's Take on the key provisions of the Draft Guidelines, read the full article
Taxand India have summarised the key provisions of the Draft Guidelines and compared them with the 2001 Guidelines.

Your Taxand contact for further queries is:
Mukesh Butani
T. +91 124 339 5010
E. Mukesh.Butani@bmrlegal.in

Taxand's Take Author