this story originally appeared in on jun 4 2013mumbai grant of new bank licences will remain subjective instead of being decided on predetermined metrics as rbi maintained its stance of not giving in to the wishes of prospective applicants to ease conditions the regulator declined to say by when the next bank will be born the central bank has also poured cold water on hopes of regulatory forbearance on liquidity requirements for finance firms such as idfc which are planning to convert into banks the 165page clarification on new bank guidelines posted on rbis website failed to define the two key measures on which it would grant a bank licence fit and proper persons and businesses misaligned with the banking model all regulated financial services activities of the promoters of prospective banks will have to be brought under the nonoperating financial holding company and the promoters business activities of the previous decade will be scrutinised closely promoters must fully own the holding company and will not be allowed to set up any financial services venture in the first three years of the commencement of banking activities it said there is clarity now on the holding company structure said shinjini kumar director pricewaterhousecoopers many were hoping for rbi to relent on the holding structure since it is very inconvenient for many of them to follow the proposed structure said shinjini kumar of pricewaterhousecoopers after more than a decade the central bank plans to issue new banking licences with a focus on financial inclusion in a country where more than half the population has never walked into a bank but the process initiated in 2004 has been dragging due to legal issues and apathy although many businesses want to own a bank the regulator wants to limit it the requirement that promoters and promoter groups should have a past record of sound credentials and integrity as a part of fit and proper criteria is a matter of overall judgment and no indicative criteria can be spelt out it clarifiedit also left the interpretation open on what businesses may not qualify to own a bank as it skipped defining misaligned business misaligned with the banking model would mean business model and business culture which potentially puts the bank and the banking system at risk on account of group activities such as those which are speculative in nature or subject to high asset price volatility it said it is not possible to exactly define substantial contribution in terms of percentage but it will be seen in the overall context of business activities the reluctant central bank which came up with the guidelines on february 22 received 443 queries from 34 individuals and organisations seeking clarifications of this the highest were on the holding company structure followed by the chances of relaxation for finance companies converting into banks from meeting the cash reserve requirement crr and statutory liquidity ratio slr amid speculation that there could be more than 50 applicants and some of the