Highlights of new bank licences discussion paper

Foreign shareholding in new banks could be capped at 50%, though with a lock-in period of ten years.
Industrial and business houses that have predominant presence in the financial sector could be allowed to set up banks after proper checks and balances in place. As an intermediate step, the industrial houses could be allowed to take over regional rural banks (RRBs).
Initial capital requirements may be prescribed at Rs500 crore, which may be raised to Rs1,000 crore over five years. The higher capital requirements are aimed at ensuring serious players and optimum utilisation of capital.
The Reserve Bank of India (RBI) may require promoters to bring in minimum 40% capital with lock-in period of five years, with threshold for other significant shareholders to be restricted to 10%. A case could be made for increasing promoter threshold to 20% though subject to stringent criteria.
The stance of the discussion paper could be positive for large non-banking financial companies (NBFCs) vying an entry in the banking space (Reliance Capital, Shriram Transport Finance, Edelweiss, etc).