10 friends decided to start a banking business by incorporating a banking company as 8 of them are having banking experience. They have decided to float a small finance bank. Subsequently they applied for licensing to RB

To The Board of Directors XYZ Banking Limited To be registered as a banking company, the entity must be a company registered under the Companies Act, 2013 or previous company laws or a foreign company having the prescribed minimum paid up capital. The minimum paid-up voting equity capital for a bank shall be ₹500 Crore for universal banks and ₹200 Crore Rupees for small finance banks. According to Section 12 of the Banking Regulation Act, 1949- banking company shall not carry on business in India, unless it satisfies the following conditions, namely that:- the subscribed capital of the company is not less than one-half of the authorised capital, and the paid- up capital is not less than one-half of the subscribed capital and, if the capital is increased, it complies with the conditions prescribed in this clause within such period not exceeding two years as the Reserve Bank may allow; the capital of such banking company consists of- equity shares only; or equity shares and preferences shares: Provided that the issue of preference share shall be in accordance with the guidelines framed by the Reserve Bank specifying the class of preference shares, the extent of issue of each class of such preference shares (whether perpetual or irredeemable or redeemable), and the terms and conditions subject to which each class of preference shares may be issued. Provided further that no holder of the preference share, issued by the company, shall be entitled to exercise the voting right. Person holding shares in a banking company shall not, in respect of any shares held by him, exercise voting rights on poll in excess of ten per cent of the total voting rights of all the shares-holders of the banking company. Provided that the Reserve Bank may increase, in a phased manner, such ceiling on voting rights from ten per cent to twenty-six per cent. Every chairman, managing director or chief executive officer by whatever name called of a banking company shall furnish to the Reserve Bank through that banking company returns containing full particulars of the extent and value of his holding of shares, whether directly or indirectly, in the banking company and of any change in the extent of such holding or any variation in the rights attaching thereto and such other information relating to those shares as the Reserve Bank may, by order, require and in such form and at such time as may be specified in the order. (Name) (Designation)