On-tap bank licence guidelines

Q.  Which of the following is/are true about On-tap bank licence?

1) Setting up a non-operative financial holding company (NOFHC) has been made mandatory for individuals and standalone promoting entities that do not have other group entities.
2) The promoters should hold a minimum of 60 per cent stake in the bank.
- Published on 03 Aug 16

a. Only 1
b. Only 2
c. Both 1 and 2
d. Neither 1 nor 2

ANSWER: Neither 1 nor 2
 
  • Setting up a non-operative financial holding company (NOFHC) has not been made mandatory for individuals and standalone promoting entities that do not have other group entities.
  • For others, the RBI has mandated that at least 51 per cent stake in the NOFHC should be owned by the promoter group.
  • The promoters should hold a minimum of 40 per cent stake in the bank, locked-in for a period of five years, but the stake should be brought down to 15 per cent within 15 years.
  • After setting up the bank, the NOFHC will not be allowed to set up any financial services entity for three years.

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