Rbi bank licensing policy

The commission structure or incentive mechanism should be devised in a manner that mere increase in the number of clients served or the transaction volume does not drive the commission.

The remuneration should combine fixed and variable parts dependent, inter-alia, on some indication or measure of customer satisfaction. Some part of the variable remuneration could be deferred or clawed back in case of deficiency of service. RRBs and not BCs are permitted to collect reasonable service charges from the customers in a transparent manner.

RRBs should adopt technology-based solutions for managing the risk, besides increasing the outreach in a cost effective manner. The transactions should be accounted for on a real time basis and the customers should receive immediate verification of their transactions through visuals screen based or other means debit or credit slip.

The arrangements with the BC shall specify:. RRBs should carry out a detailed review of the performance of various BCs engaged by them at least once in a year and they should monitor the activities of BCs through their Controlling Offices and also through various fora under Lead Bank Scheme i. The internal control mechanism in the bank should include visits to BCs and interface with customers at periodical intervals.

RRBs should take all measures to protect the interests of the customers. Some such safeguards are outlined below:. Lead District Manager LDM of the lead bank could attend such meetings in the district to get a direct feedback and provide such feedback to the controlling offices. A Grievance Redressal Machinery should be constituted within RRBs for redressing complaints about services rendered by the BCs and wide publicity given about it through electronic and print media.

The name and contact number of the designated Grievance Redressal Officer of the bank should also be made known and widely publicized. The designated officer should ensure that genuine grievances of customers are redressed promptly. The grievance redressal procedure of the bank and the time frame fixed for responding to the complaints should be placed on the bank's website. Financial literacy and customer education should form an important part of the business strategy and commitment by RRBs adopting the BC model.

RRBs may scale up efforts substantially towards educating their clientele in their respective vernacular languages regarding the benefits of banking habit. The Annual Report of the RRBs should also include the progress in respect of extending banking services through the BC model and the initiatives taken by them in this regard. RRBs may also use the print and electronic media including in the vernacular language to give wide publicity about implementation of the BC model by them.

While submitting the current quarter Returns, the previous quarter's reference must be quoted in the forwarding letter. Report of branches opened in Tier Centres without prior approval of RBI consequent to relaxations - Status as at the end of quarter. Skip to main content. This happened in two phases. Ten banks were licensed on the basis of guidelines issued in January The guidelines were revised in January based on the experience gained from the functioning of these banks, and fresh applications were invited.

The applications received in response to this invitation were vetted by a High Level Advisory Committee constituted by the RBI, and two more licences were issued. The Union Finance Minister had made an announcement in his budget speech for that the RBI was considering giving some additional banking licences to private sector players.

In pursuance of the budget announcement, the RBI put out a Discussion Paper on its website on August 11, inviting feedback and comments. The Discussion Paper elicited wide response from the general public, consultants, existing banks, industrial and business houses, Non-Banking Financial Companies, Micro Finance Institutions, etc.

There was extensive discussion in the media through analytical pieces as well as editorial opinion. The RBI also held discussions with important stakeholders. The comments received on the draft guidelines have been examined. While preparing these guidelines, the Reserve Bank recognizes the need for an explicit policy on banking structure in India keeping in view the recommendations of the Narasimham Committee, Raghuram Rajan Committee and other viewpoints.

Accordingly, the Reserve Bank would come out with an overall policy discussion paper on banking structure in India within two months. If considered eligible for promoting a bank, they will have to comply with the requirements laid down in these guidelines as also the conditions specified in paragraph 2 L below.

RBI may, inter alia, seek feedback on applicant Groups on these or any other relevant aspects from other regulators, and enforcement and investigative agencies like Income Tax, CBI, Enforcement Directorate, etc. The objective is that the Holding Company should ring fence the regulated financial services entities of the Group, including the bank from other activities of the Group i. In this context, it is clarified that :.

Accordingly, the activities at a above and activities at b above which are to be carried outside the bank will have to be carried out through separate financial entities under the NOFHC. The bank shall open at least 25 per cent of its branches in unbanked rural centres population upto 9, as per the latest census.

The bank shall comply with the priority sector lending targets and sub-targets as applicable to the existing domestic banks. Any non-compliance of terms and conditions will attract penal measures including cancellation of licence of the bank.

At the first stage, the applications will be screened by the Reserve Bank. There are several conditions for applying for new bank licenses set for individual applicants and entities like NBFCs. Stipulation of shareholding, fit and proper criteria for promoters etc.

With the present policy, the previous practice of periodic invitation of bank license application will come to an end. So far, the RBI has invited applications and permitted new private sector banks in , and in The new license policy is designed for universal banks. Banks that can perform the whole set of allowed services and products under universal bank license.

At present, most of the public sector banks, private sector banks and foreign banks have universal bank license.