RBI likely to support realty firms, brokers
New Delhi- Reserve Bank of India (RBI) has softened norms to allow realty firms and brokers to apply for banking licenses.
The RBI final guidelines are likely to be announced by February end. According to sources, these guidelines seem to strand reservations for realty firms and brokers.
RBI had released draft guidelines in August 2011, according to which the entities having significant (10 percent or more) income or assets or both from real estate construction and/or broking activities individually or taken together in last three years will not be eligible to apply for banking licenses.
The Bank has said that its past experience with real estate brokers on the boards of banks has not been pleasing. The regulator and the finance ministry are likely to arrive at a common position on the issue.
The 2011 draft guidelines were being opposed from several months, including the finance ministry, for the reason that if banks can be allowed to carry out broking activities, then why the entities engaged in such legally permitted activities should not be allowed. Furthermore, if banks could have ample exposure in real estate, there was no reason why real estate developers should be barred from setting up banks.
Even though if the new norms would not stop real estate and brokerage firms, they would still insist on rigorous fit and proper criteria for all sectors involved in volatile activities, revealed sources. Though RBI allows them to apply for banking licences, it does not ensure that the firms and brokers will be allowed to set up banks.
However, the final norms are expected to keep most of the proposals in the draft norms. For instance, the minimum capital requirement is expected to remain at Rs 500 crore as mentioned in draft norms.
Till now, RBI has issued licences to only 12 banks, in two phases, including conversion of a cooperative bank into a commercial one. After giving an in-principle licence, the bank would give one year time to an entity to set up bank.
Click here for related forum discussion
Related Real Estate News:
Developers witness rising profits with increasing sales
Small plots can be merged together, recommends review panel
Real estate prices unlikely to reduce
2011 draft guidelines, banking licenses, brokerage firms, broking activities, Finance ministry, New Delhi, RBI final guidelines, Real estate brokers, real estate construction, Realty brokers, Realty firms, Realty News, Reserve Bank of India
[...] RBI likely to support realty firms, brokers [...]
[...] RBI likely to support realty firms, brokers [...]