Control over Organisation of Banks
Which Authority to grant licence for
establishing a new Bank in India – RBI
The following factors are taken into account
while considering an application for starting new bank of India
1. Information about promoters/promoter group
2. Source of funding of the Capital
3. Professional management support
4. Geographical area to be
serviced
5. business mix
6. Types of economic activities to be performed
7. Profitability of the operations
Name the authorities which control the
functioning of cooperative banks.
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Reserve Bank
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Branch licensing
area of operations,
exposure norms,
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interest rates etc.
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State Govt.
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Incorporation and
registration of Cooperative
Banks,
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Management audit, amalgamation, liquidation /
winding up
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Branch expansion within the
district does not require permission of RBI.
Foreign Banks: Foreign banks are allowed
to operate through branches only. A new
foreign bank is required to bring in minimum assigned capital of US $ 50
million, minimum capital adequacy ratio 9% on aggregate risk weighted assets of
their Indian Operations.
How
are Regional Rural Bank formed – Under Section3 of the RRB Act, 1976 a sponsor
bank has to apply to the Central Govt. (50:35:15) (Central Govt : Sponsor Bank
: State Govt) subscription ratio of the .
Specific permission of RBI is required for closure of branches in
Rural Areas.
To
accept Non Resident Foreign Currency deposits at specific branches,
permission has to be obtained from RBI.
Banks are allowed to Setup Subsidiaries to
undertake business authorized under
section 6(1) of the BR Act, 1949. Aggregate
Investment in all the subsidiaries shall not exceed 20% of the Banks’
PaidUp Capital
Three-tiers
of Organisational Structure
Branch, LHO/Zonal Office, Head Office
Minimum
Paid Up Capital – Capital Requirements (21)
(Section 11 of BR Act, 1949)
Incorporated
In India
A i. For a banking company incorporated in India
having place of business in more than one state
ii. If any such place or place of business is or are
situated in the City of Mumbai Or Kolkata or both
B
ii. If all places of business in one
State but none of which in Mumbai City or Kolkata
v. For principal place of business
The actual
requirement of the Capital is determined by the size of business of each bank.
The Present Minimum Capital Adequacy
Ratio (CRAR) is 9% comprising of Tier I and Tier II capital and unallocated
reserves.
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Tier I Capital
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Tier
II Capital
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Paid Up
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Capital, Statutory
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Undisclosed
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reserves
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and
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cumulative
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Reserves,
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and
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other
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perpetual preference shares
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disclosed free reserves,
if
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Revaluation Reserves
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any and
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General Provisions and Loss Reserves
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Capital
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Reserves
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Hybrid Debt Capital
Instruments
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representing
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surplus
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Subordinated Debt
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arising
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out
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of
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sale
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proceeds of assets
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Authorised Capital of each public sector bank
cannot be less than Rs. 1500 crores.
To establish a new private sector bank, the minimum Paid-Up Capital of Rs.
200 crores.
Foreign Investors are permitted to hold up to
10% of Paid-Up capital of banks established
in India.
Shareholders of commercial banks can exercise one vote for every share held by them. However, no person can
exercise more than 10% of total voting
rights of shareholders of the bank.
The above restriction on voting rights does
not apply to GOI in respect of holding of shares.
As far as Cooperative Bank is concerned, each
share holder can exercise only one vote, irrespective of number of shares held
by him.
