An Reserve Bank of India (RBI) internal working group report is recommending significant changes to the ownership structure that currently governs private banks. The group is proposing an entry for large corporations or industrial houses to own banks if they meet certain conditions.

Key highlights:

· Cap on promoter stake may be raised to 26% from 15% in long run (15 yrs)

· For non-promoter shareholding, uniform cap of 15% can be for all shareholders

· Large corp/ind houses can be promoters only after Banking Act Amendment

· NBFCs with > Rs 50,000 crore asset can be converted into banks after 10 years

· 3 year track record enough for payments bank to be converted into small fin banks

· Small fin banks & payments banks can be listed after 10 years of operations

· Min cap for licensing universal banks must be raised to Rs 1000 crore from Rs 500 crore

· Min cap for licensing small fin banks should be raised to Rs 300 crore from Rs 200 crore

· Non-operative financial holding company can remain preferred structure for issuing universal bank licence

· Banks licensed before 2013 may move to NOFHC structure at their discretion

· Pre-2013 licensed banks to move to NOFHC structure in 5 years from tax-neutrality

Watch the video for a detailed explanation

(Edited by : Abhishek Jha)