There are 3 types of Scheduled banks in India:
1. Public Sector Scheduled Banks (27 PSBs (21 Nationalized and 6 SBI Groups))
2. Private Sector Scheduled Banks
3. Foreign Scheduled Banks
Criteria for Public Sector Banks:
The Private Sector Banks are banks where greater part of the equity are held by the private share-holders and not by the government. Private Sector Banks are classified as old Private Sector Banks and New Private Sector Banks.
Criteria For New Private Sector Banks By RBI:
1. Promoter / promoter groups with diversified ownership, sound credentials and integrity with a successful track record for at least 10 years in their businesses will be eligible to promote banks.
2. The initial minimum paid-up capital will be Rs. 500 crores.
3. The aggregate non-resident share holding from FDI, NRIs and FIIs (Foreign Institutional Investors) shall not exceed 49% for the first five years from the date of licensing of the New Private Sector Banks.
4. The banks shall open at least 25% of its branches in un-banked rural centres (population up to 9999 as per 2001 census).
Criteria for Foreign Banks:
1. RBI has laid down new guidelines (criteria) that will require several –but not all – foreign banks to set up wholly owned subsidiaries.
2. The guidelines set other criteria which will determine which foreign banks (out of 43 in India) will be required to switch over to the subsidiary route.
3. The guidelines state that the foreign banks who have legislation that give a preferential claims to deposits in the home country in a winding-up proceeding would have to set up a wholly owned subsidiary (WOS) .
4. A Banking subsidiary will create a separate legal entity which will have its own capital base, and local Board of Directors.
5. RBI said the minimum paid –up equity capital for a wholly owned subsidiary would be Rs. 500 crore, upfront