CURRENT AFFAIRS

Detailed explanation-1: -Based on the experience of licensing two universal banks in 2014 and that of granting in-principle approvals for Small Finance Banks and Payments Banks, the Reserve Bank released the ‘Draft Guidelines for ‘on tap’ Licensing of Universal Banks in the Private Sector’ at its website on May 5, 2016 for comments.

Detailed explanation-2: -Any individual/entity with at least 10 years of experience in banking and finance at the senior level or private entities with 10 years of successful track record are eligible to apply for on-tap licensing as UBs. Secondly, aspiring entities ought to have assets of Rs. 5000 crore or above.

Detailed explanation-3: -Minimum capital 200 crore, with a commitment to increase to Rs. 300 crore within three years. In order to meet with this requirement, all banks in private sector should have a net worth of Rs 300 crore at all times. Where the net worth declines to level below Rs 300 crore, it should be restored within reasonable time.

Detailed explanation-4: -The Reserve Bank of India (RBI) had issued guidelines for licensing of new banks in the private sector on February 22, 2013. Reserve Bank issued in-principle approval to two applicants and they have since established the banks as per the licences.

Detailed explanation-5: -The Reserve Bank of India (RBI) issues licences to entities to carry on the business of banking and other businesses in which banking companies may engage, as defined and described in Sections 5 (b) and 6 (1) (a) to (o) of the Banking Regulation Act, 1949, respectively.