Industry body ASSOCHAM has welcomed draft norms issued by the Reserve Bank of India for new licenses to operate commercial banks in the private sector, saying the guidelines will allow only serious players, promote financial inclusion and encourage high level of corporate governance.

The Associated Chambers of Commerce and Industry of India said that it is good that entities in the private sector owned and controlled by residents with diversified ownership, sound credentials and integrity and having successful track record of at least 10 years will be eligible to promote banks.

Mr DS Rawat secretary general of ASSOCHAM said that “We have always advocated minimum capital requirement of INR 500 crore for new entrants.” He said that when a wholly owned, non operating holding company is registered with the RBI as a non banking finance company and keeps at least 50% independent directors on its board, it will be able to ring fence the regulated finance services activities of the group including the new bank.

Entities that earn 10% or more from realty, construction or broking activities either individually or taken together in the past three years will not be eligible for such licenses, the apex bank has proposed.

Mr rawat said that “This is a positive and bold step towards orderly growth of banking sector and affording stability of financial markets. As a further step to boost financial inclusion, all new banks will be required to open at least 25% of new branches in un banked rural centres with population of less than 9,999 as per 2001 census. This will create additional resources and infrastructure to meet the growing needs of banking across all geographies.

ASSOCHAM also welcomed the guidelines which said that exposure to promoters should not to exceed 10% of the paid-up capital and reserves of the bank, aggregate exposure to all promoter group entities not to exceed 20 per cent, and the new bank should get its shares listed on stock exchanges within two years.