FinMin for real estate, broking firms to start banks
Real Estate

FinMin for real estate, broking firms to start banks

The Union Finance Ministry has said that the Reserve Bank should allow real estate companies and broking firms to set up banks as adequate safeguards will be there to prevent exposure of promoters to related entities.

The Ministry, in its comments to RBI on giving out new bank licences, has said that such entities can be allowed. But there should be complete ban on taking exposure in the group companies or entities related to promoters, sources said. Even the vendor and large customers of such promoters can’t get loan from the new bank, sources said, adding that this move will minimise accumulation of risk.

As per the RBI’s draft norms for licensing of new banks in the private sector released in 2011, entities or groups having significant (10 per cent or more) 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.

The Union Finance Ministry has said that the Reserve Bank should allow real estate companies and broking firms to set up banks as adequate safeguards will be there to prevent exposure of promoters to related entities. The Ministry, in its comments to RBI on giving out new bank licences, has said that such entities can be allowed. But there should be complete ban on taking exposure in the group companies or entities related to promoters, sources said. Even the vendor and large customers of such promoters can’t get loan from the new bank, sources said, adding that this move will minimise accumulation of risk. As per the RBI’s draft norms for licensing of new banks in the private sector released in 2011, entities or groups having significant (10 per cent or more) 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.

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