You can run a commercial bank by yourself. Of course, if you meet all the criteria stipulated by the Reserve Bank of India (RBI). Anytim elicences are now a reality with the central bank on Monday releasing final guidelines for on-tap licences for universal banks, the last major reform that will have the stamp of Governor Raghuram Rajan before he demits office of September 5. Big industrial groups in India, which dreamed of starting commercial banks, will, however, not be eligible for these licences, and at the most they can hold 10% stake in a new bank. Individuals, banking professionals and NBFCs with a proven 10-year track record and sound credentials can apply for the new round of licences. Even NBFCs that are part of larger conglomerates with more than 40% of their total assets coming from non-financial businesses will not be eligible. Religare Institutional Research said in a report, “The RBI has barred the entry of NBFCs that are part of a group with total assets of Rs 5,000 crore and has non-financial businesses accounting for over 40% of total assets or gross income; this, in our view, will exclude NBFCs like Bajaj Finserv, Mahindra & Mahindra Financial Services and Cholamandalam Investment and Finance Company. Large industrial houses have also been disqualified as eligible entities, but have been permitted to invest up to 10% in banks; this means that L&T Finance cannot convert into a bank with more than 10% holding by L&T.” Individuals and companies, directly or indirectly connected with large industrial houses, may be permitted to participate in the equity of a new private sector bank up to 10% and will not have a controlling interest in the bank. Such shareholders cannot have a director on the board of the bank through any shareholder agreement. The limit of 10% would apply to individuals and all inter-connected companies belonging to the concerned large industrial houses on an aggregate basis. The new bank will have initial paid-up capital of Rs 500 crore and must have a minimum net worth of Rs 500 crore at all times. It will have to be listed within the first years of its operations. While individuals do not need to set up a Non-Operative Financial Holding Company (NOFHC) structure, it is mandatory for entities the bank can be set up only through an NOFHC which will be registered as an NBFC with the RBI. The NOFHC will not be allowed to set up any new entity for the next three years. However, it does not debar the bank from having a subsidiary, joint venture. NOFHC would be set up to ring-fence the regulated financial services entities of the group, including the bank, from other activities of the group. If the bank raises the equity capital during the first five years from the date of commencement of business, the promoter or the promoter group should continue to hold 40% of the equity capital. After this initial period, the shareholding of the promoter group will have to come down to 30% within the first 10 years, 15% in within the first 15 years. The new guidelines ensure a diversified shareholding and independent board with no large corporate body holding majority stake. George Antony, managing director, UAE Exchange India, said, “This is really encouraging for NBFCs like ours which have completed over 10 years and are compliant to all other submissions. A final call on the application for the universal banking licence will be taken post the board meeting to be convened shortly.” The shareholding of the promoter or the promoter group in the NOFHC will be through individuals, non-financial services entities and Core Investment Companies and Investment Companies in the Group. Apart from these, no one else can opt to be a shareholder in the NOFHC. Not less than 51% of the total voting equity shares of the NOFHC shall be held by promoter/s and companies forming part of the promoter group. Only up to 49% of the total voting equity shares of the NOFHC could be held by the non-promoters. Individual, who is not a promoter, along with his relatives will be allowed to hold only 10% of the shareholding of the NOFHC. Religare in its research report said it doesn’t see many NBFCs converting into banks given the stringent guidelines and statutory norms. “Thus, though on-tap, licensing will be limited.” The new set of banks will have to maintain a minimum capital adequacy ratio of 13% of its risk-weighted assets (RWA) for a minimum period of three years after the commencement of its operations subject to any higher percentage as may be prescribed by RBI from time to time. The application will be whetted by an external advisory committee set up by the RBI and will be screened by internal screening committee of the RBI. Once the application is rejected then the next application from the same group can come only after three years. Aggrieved applicants can appeal against the decision to the central board of the RBI.