RBI to set new norms for the real estate firm
The finance ministry says that the Reserve Bank should allow the real estate companies and the broking firms to set up their own banks as adequate safeguard will be there to prevent the exposure of the promoters to the related entities.
As per the sources, the firewall has been proposed to avoid undue influence of bank CEO to lend to the group companies.
According to RBI’s draft norms for the licensing of new banks in the private sector released in 2011 states that entities or groups having significant income or assets or both from real estate construction and or broking activities individually or taken together in the last three years will not be eligible for new banks.
The finance ministry also suggested that NOHC, the Non operative Company may be substituted by the Non-Operative Financial Holding Company (NOFHC) to signify that only finance sectors entities will be a part of the NOFHC.
The ministry has favoured RBI’s proposal of opening 25 percent branches in unbanked areas of the country has also been accepted.
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