The stake that promoters can hold in their banks has now been raised by RBI from 15 percent to 26 percent. SFBs have been provided with more time from RBI to list to align regulations to meet the requirements of a dynamic banking landscape.

RBI has accepted these parts of 21 recommendations of an Internal Working Group (IWG) with modifications. The IWG made 33 recommendations, with the remaining 12 being under examination. RBI’s statement on Friday didn't mention the issue of admitting large corporates/industrial houses to promote banks, as proposed by the IWG. According to the analysts, the recommendation on allowing promoters to hold a 26 percent stake in their bank will prove beneficial for the promoters of banks such as Kotak Mahindra, IndusInd, Bandhan, and some SFBs. This would allow promoters, who have diluted their holding to below 26 percent, also to raise it and would be uniform for all types of promoters. The promoter can choose to bring down the holding to below 26 percent, any time after the five-year lock-in. The minimum requirement on the experience track record of the promoting entity, including for a converting NBFC, is to remain at 10 years for Universal Banks and five years for SFBs. Still, RBI is examining IWG’s recommendation about large NBFCs having an asset size of over ₹50,000 crores, including those owned by a corporate house, being permitted to convert to banks given that they have completed 10 years of operations. RBI has set a track record condition of five years for Payments Banks planning to convert into an SFB.

RBI stated that SFBs should be listed within eight years of the commencement of operations. The IWG had recommended that SFBs should be listed within ‘six years from the date of reaching net worth equivalent to prevalent entry capital requirement prescribed for Universal Banks’ or ‘ten years from the date of commencement of operations, whichever is earlier. RBI declared that Non-Operative Financial Holding Company (NOFHC) should proceed to be the preferred structure for all new licenses to be issued for Universal Banks. Though, a NOFHC may be necessary solely in cases where the individual promoter/promoting entities/converting entities have other group outfits.