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http://pib.nic.in/newsite/erelease.aspx?relid=91116

Beside above, the Bill would pave the way for new bank licenses by RBI resulting in opening of

new banks and branches. This would not only help in achieving the goal of financial inclusion by

providing more banking facilities but would also provide extra employment opportunities to thepeople at large in the banking sector.

The salient features of the Bill are as follows:

To enable banking companies to issue preference shares subject to regulatory guidelines by the

RBI;

To increase the cap on restrictions on voting rights;

To create a Depositor Education and Awareness Fund by utilizing the inoperative deposit

accounts;

To provide prior approval of RBI for acquisition of 5% or more of shares or voting rights in abanking company by any person and empowering RBI to impose such conditions as it deems fitin this regard;

To empower RBI to collect information and inspect associate enterprises of banking

companies;

To empower RBI to supersede the Board of Directors of banking company and appointment of

administrator till alternate arrangements are made;

To provide for primary cooperative societies to carry on the business of banking only after

obtaining a license from RBI;

To provide for special audit of cooperative banks at instance of RBI by extending applicability

of Section 30 to them; and

To enable the nationalized banks to raise capital through bonus and rights issue and also

enable them to increase or decrease the authorized capital with approval from the Government

and RBI without being limited by the ceiling of a maximum of Rs. 3000 crore under the BankingCompanies (Acquisition and Transfer of Undertakings) Act, 1970/1980.

http://pib.nic.in/newsite/erelease.aspx?relid=91116http://pib.nic.in/newsite/erelease.aspx?relid=91116http://pib.nic.in/newsite/erelease.aspx?relid=91116

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http://www.moneylife.in/article/banking-amendment-bill-what-are-its-benefits-to-the-banking-

public/30304.html

The bill raises the voting rights in banks

At present there is a cap of 1% on voting rights to private investors in public

sector banks. This in effect means that the private investors had no

meaningful role to play in the functioning of the bank even as a shareholder.

This cap is now proposed to be raised to 10%, paving the way for more

investment in public sector banks by the foreign institutional investors, who

have been sitting on the sidelines so far in respect of investingin these banks.

Similarly, there is a cap of 10% on voting rights to investors in private sectorbanks, which is now proposed to be raised to 26% through this bill. This in

effect means that the promoters and their group can have voting powers up to

26%, which, in fact, is a double edged sword. On the one hand, it gives the

promoters a better say in the management of the bank and coupled with the

higher commitment of the promoters it could be a spring board for the faster

growth of the bank. On the other hand, it can influence the decisions of the

management, which may or may not be in the best interest of the bank and its

other stakeholders. The RBI should, therefore, keep a close watch on thefunctioning of all private banks, so that these additional voting rights serve the

interest of all stakeholders equitably.

A primary credit society is any cooperative society other than a primaryagricultural credit society. Its principal business is transaction of bankingbusiness and its paid-up share capital and reserves are less than Rs 1 lakh.Section 7 of the Banking Regulation (BR) Act prohibits use of words ebanks f,ebanking f or ebanker f by any cooperative society other than a cooperative

bank. But a subsection to Section 7 clearly says that the above prohibitionshall not apply to a primary credit society.

1. Minimum Listing Requirements for New Companies

The following eligibility criteria have been prescribed for listing of companies

http://www.moneylife.in/article/banking-amendment-bill-what-are-its-benefits-to-the-banking-public/30304.htmlhttp://www.moneylife.in/article/banking-amendment-bill-what-are-its-benefits-to-the-banking-public/30304.htmlhttp://www.moneylife.in/article/banking-amendment-bill-what-are-its-benefits-to-the-banking-public/30304.htmlhttp://www.moneylife.in/article/banking-amendment-bill-what-are-its-benefits-to-the-banking-public/30304.htmlhttp://www.moneylife.in/article/banking-amendment-bill-what-are-its-benefits-to-the-banking-public/30304.html

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on BSE, through Initial Public Offerings (IPOs) & Follow-on Public Offerings(FPOs):

The minimum post-issue paid-up capital of the applicant company(hereinafter referred to as "the Company") shall be Rs. 10 crore for IPOs &

Rs.3 crore for FPOs; and

The minimum issue size shall be Rs. 10 crore; and The minimum market capitalization of the Company shall be Rs. 25 crore

(market capitalization shall be calculated by multiplying the post-issue

paid-up number of equity shares with the issue price).

Further :

In respect of the requirement of paid-up capital and market capitalization,the issuers shall be required to include in the disclaimer clause forming a

part of the offer document that in the event of the market capitalization

(product of issue price and the post issue number of shares) requirement

of BSE not being met, the securities of the issuer would not be listed on

BSE.

The applicant, promoters and/or group companies, shall not be in defaultin compliance of the listing agreement.

The above eligibility criteria would be in addition to the conditionsprescribed under SEBI (Issue of Capital & Disclosure Requirements)

Regulations, 2009.

The Issuer shall comply to the guidance/ regulations applicable to listingas bidding inter alia from

o Securities Contracts (Regulations) Act 1956o Securities Contracts (Regulation) Rules 1957o Securities and Exchange Board of India Act 1992o And any other circular, clarifications, guidelines issued by the

appropriate authority.

o Companies Act 1956

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NEW DELHI: Minimum investment limit for obtaining a bank licence shouldbe pegged at Rs 1,000 crore with the stipulation that promoter should bring inthe amount within a period of five years, said industry chamberAssocham.The RBI, in its draft report on new bank licences has stipulated a minimuminvestment of Rs 500 crore for getting a bank licence. The central bank is

currently working on the final guidelines for new bank licences.

"Considering the heavy investment needed for technology up gradation for thefuture purposes, there can be a stipulation suggesting that minimum capitalrequirement shall be hiked to Rs 1,000 crore from Rs 500 crore within fiveyears of starting the bank. This can help to ensure only serious and resourcefulentities are eligible to apply," it said in a statement.

It said that new banks may have to invest heavily in technology and to takesteps to achieve financial inclusion and to scale up the operations on viable

lines over time.On the matter of foreign shareholding in the bank, the chamber welcomed thecap of 49 per cent for the first five years.

However, it said to help foreign shareholders to form their long-terminvestment decisions, there is a need for clarity on what would be the status oflimit ofFII holding after first five years.It also said the mandatory requirement of new bank to get listed within twoyears of licensing is not pragmatic and feasible and the time period should beincreased to five years.

Further, it added that there should be some method by which the banks arecompensated suitably for the lower profitability from the branches inunbanked areas.

http://economictimes.indiatimes.com/topic/Assochamhttp://economictimes.indiatimes.com/topic/RBIhttp://economictimes.indiatimes.com/topic/FIIhttp://economictimes.indiatimes.com/topic/FIIhttp://economictimes.indiatimes.com/topic/RBIhttp://economictimes.indiatimes.com/topic/Assocham