The Reserve Bank of India (RBI) on Thursday said that the final guidelines will be issued and the process of inviting applications for setting up new banks in the private sector will be initiated only after the Banking Regulation Act is amended.
The central bank made it clear that it needs more power — like to supersede bank boards — before it could invite new entrants. In February 2010, the finance ministry had announced that the RBI would consider issuing fresh licences to private players and non-banking financial entities. In August 2010, the RBI released a discussion paper taking into account international practices and experience with private sector banks.
The draft guidelines were released in August 2011, specifying the conditions relating to eligible promoters, minimum capital required, criteria for foreign shareholding, business model, desirable corporate structure and governance standards of the applicant group.