The Reserve Bank of India on Monday released the final set of guidelines for eligible entities to apply for on-tap universal bank licences. Non-banking financial companies, qualified individuals and some private companies will be eligible to apply for the licences. The Central bank excluded large industrial houses, but they can invest up to 10% in the new banks. NBFCs that are part of big conglomerates with more than 40% of their total assets coming from non-financial businesses will also not be eligible, reported PTI.

This licensing policy is a shift from the current stop-start system where RBI opens the window for bank licences from time to time. According to the guidelines, the licensing window will be open on-tap, meaning the applications could be submitted to RBI at any point of time. At present, there are 27 public sector banks and 24 private sector banks in the country, reported PTI.

Those who will be eligible to apply for licences include NBFCs that are "controlled by resident Indians" and have a successful track record of at least 10 years. In case of individuals, one has to be a resident of India and have 10 years of experience in banking and finance at a senior level. There is also a small window for private companies to apply. The applicant will have to clear the 'Fit and Proper' criteria. According to the guidelines, "the promoter/promoting entity/promoter group should have a past record of sound financials, credentials, integrity and have a successful track record for a minimum of 10 years."

The foreign shareholding in the bank will be in accordance with the existing Foreign Direct Investment rules and hence cannot be more than 74%. The new banks will have to follow the existing prudential regulations, including opening 25% of the total branch network in rural areas where there is no bank, reported LiveMint.

The last time RBI had issued guidelines for licensing of new banks in the private sector was on February 22, 2013. Consequently, the RBI issued in-principle approval to two applicants and they have established Bandhan Bank and IDFC Bank. The Central bank has also licensed many payments banks and small finance banks.