RBI clarifies capital adequacy norm under new pvt bank licence

RBI

RBI clarifies capital adequacy norm under new pvt bank licence

The Reserve Bank today clarified that the capital adequacy norms will be applicable on a consolidated basis on wholly-owned Non-Operative Financial Holding Company (NOFHC) of the entities in the private sector banking.

As per RBI guidelines for Licensing of New Banks in the Private Sector, the entities or group in the private sector are required to set up wholly-owned Non-Operative Financial Holding Company (NOFHC) for carrying out business of banking and other permissible financial activities.

The guidelines further stipulate that the capital adequacy norms would be applied to the NOFHC on consolidated basis as applicable to existing banking groups.

“In this context, it is clarified that consolidated (Group) level capital adequacy would also mean application of consolidated capital adequacy norm to the NOFHC after consolidating the relevant entities held by it,” RBI said in a notification.

As per RBI guidelines, the NOFHC are required to be wholly owned by the promoter or promoter group to run the bank.

Also, the NOFHC are mandated to hold the bank as well as all the other financial services entities of the group.

Source :BankingUpdates

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