BANKING AFFAIRS

Detailed explanation-1: -The validity of the in-principle approval issued by RBI will be eighteen months from the date of granting such in-principle approval and would thereafter lapse automatically. Therefore, the bank will have to be set up within eighteen months of grant of in-principle approval.

Detailed explanation-2: -On being satisfied that the applicant has complied with the requisite conditions laid down by it as part of “in-principle” approval, the RBI would consider granting it a licence for commencement of banking business under Section 22 (1) of the Banking Regulation Act, 1949 as a SFB.

Detailed explanation-3: -It should have a minimum net worth of ₹500 crore. Its CRAR should not be less than 15%. The net NPAs of the bank should not exceed 6%, during previous four quarters. It should have made profit in the preceding two years.

Detailed explanation-4: -The small finance bank should have completed at least two years of operations as Authorized Dealer Category II. The bank should have been included in the Second Schedule to RBI Act, 1934. It should have a minimum net worth of INR 5 billion.

Detailed explanation-5: -The promoters shall hold a minimum of 40 per cent of the paid-up voting equity capital of the bank, which shall be locked-in for a period of five years from the date of commencement of business of the bank.