The Reserve Bank pf India had earlier constructed an Internal Working Group under P K Mohanty. The committee was set up to review ownership guidelines of Indian private sector banks. The committee has submitted a report about the bank licensing in India.
Key Recommendations :
- Large industrial houses and corporates shall be allowed as promoters of banks. However, this is possible only after making required amendments to the Baking Regulations Act, 1949.
- Well established Non-Banking Finance Corporations with an asset size of Rs 50,000 crores and above shall be considered for conversion into banks.
- The committee has recommended a 3-year operational time for a Payment Bank to be converted into a Small Finance Bank. Currently, the Payment banks can apply for conversion into small finance banks only after five years of operation.
- Non-Operative Financial Holding company shall be continued as a preferred structure to issue new licenses.
Background:
In June, 2020, the Reserve Bank of India had set up Mohanty Panel to review the ownership of private sector banks. It examined the regulations to hold financial subsidiaries through non-operative financial holding company.
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