To operate you need to acquire a banking license and
focus on a niche. The bank should be technologically driven, modern and staffed
by qualified professionals in the banking sector.
Formally, applying for a banking license in India was a
herculean task. It could take thirteen years to get and operational license.
However an upgrade has relatively reduced the waiting
time and processing. To start a bank you need to judiciously follow the
guidelines for establishing such an organization.
How to Start a Commercial Bank
How to Start a Commercial Bank
Top
10 Largest Banks in India
The top banks in India are a mix of public company and
private sector banks. The top 10 banks are The State Bank of India, ICICI,
Punjab National Bank and HDFC. Others include IDBI, Bank of India, Union Bank,
Bank of Baroda, Canara Bank and Axis Bank.
- The State Bank of India
- ICICI Bank
- Punjab National Bank
- HDFC
- IDBI
- Bank of India
- Union Bank of India
- Bank of Baroda
- Canara Bank
- Axis Bank.
Promoters of the bank cannot own more than 40% of the
bank. NBFCs controlled by resident Indians should have 10 years appreciable
success in financial sector.
Appropriate financial and banking experience of
individuals not less than 10 years experience is mandatory. To avoid private
ownership of banks by industrialist 60% of income and assets should emanate
from the financial sector.
Promoter should have clean financial records, no defaults
including 10 years financial success. Therefore bank segmentation is as follows
60% financial domain, 40% promoters.
Voting rights
should not exceed 10%. Provisions require a startup net worth of Rs. 500 cr.
How to Start Your own Private Bank
How to Start Your own Private Bank
Guidelines
- Promoters 40% of the bank assets
- Resident Indians 10 year success in financial sector
- 10 years Appropriate financial and banking experience
- Individuals not less than 10 years experience is mandatory
- Industrialist 60% of income and assets
- Promoter should have clean financial records
- no defaults
- 10 years financial success
- Startup net worth of Rs. 500 cr.
- Voting rights should not exceed 10%.
The
Bank Functions
The commercial or retail bank has many functions, some
are listed below. They could provide loans, issue debit/credit card to
customers and take deposits.
Other functions include access to inter-bank transactions
and borrow directly from RBI. Banks can open domiciliary accounts and provide
loan facilities. They also offer financial advice to customers on different
aspects of banking services.
Functions
- Provide loans
- Issuance of debit/credit card
- Accept deposits
- Inter-bank transactions
- borrow directly from RBI
- Open domiciliary
- Provide loan facilities
- offer financial advice to customers
Regulatory
Requirements of Established Banks in India
Once the bank is established there are some regulatory
rules to follow. The bank is mandated to keep one fifth of deposits in
government bonds.
Regular update of activities to RBI and maintenance of
capital ratio is essential. The financial institution should meet priority
sector lending provisions and ensure financial inclusion of operational
demography.
The bank should adhere to MCLR regulations including full
disclosure of financial instruments and rates. You need to find out the full
operational and regulatory requirement for Indian banks.
Regulations
- Keep 1/5 of deposits in government bonds
- Regular update of activities to RBI
- Maintenance of capital ratio
- Meet priority sector lending provisions
- Ensure financial inclusion
- Adhere to MCLR regulations
This content is not an investment advice just an
information service. We don’t bare any responsibility to the accuracy of this
content.
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