An internal RBI committee -- headed by executive director S Gurumurthy -- is, at the moment, closely looking into the performance of the nine new private sector banks. The central bank is expected to come out with new licensing norms by the end of the current fiscal, once the panel submits its recommendations.

"No new licence will be issued under the original licensing norms even as 30 applications have been pending with the central bank for over three years now. The internal committee is reviewing the entire set of new private sector banks' performance to see what kind of changes are required in the licensing norms," the RBI sources said.

Nine banks set up under the existing licensing norms are UTI Bank, IndusInd Bank, Global Trust Bank, HDFC Bank, Bank of Punjab, ICICI Banking Corporation, IDBI Bank, Centurion Bankand TimesBank. Besides, the RBI had given in-principle approvals for three more banks, two of which were subsequently withdrawn.

CRB Caps and Cox & Kings were denied licences after being given the in-principle approvals. Another proposed banking venture by GSFC of Gujarat has virtually fallen through as some of the original promoters have walked out and a new set of promoters have stepped in. The RBI has directed them to come out with a fresh proposal.

According to sources in the RBI, the internal committee is closely looking into issues like the corpus of start-up capital and business profile. According to original licensing norms, new private sector banks are required to have a start-up capital of Rs 100 crore. These banks are expected to focus only on core business like lending working capital to corporates and bill discounting and not venture into activities like merchant banking, factoring, etc.

"We need to examine the implications of these norms. For instance, if the start-up capital is increased,than the banks will be able to expand their risk-weighed assets. However, that may not be desirable at this juncture when the quality of assets is of paramount importance. Similarly, we need to see whether we should allow them to get into non-core activities when worldwide the concept of universal banking is taking a backseat," sources said.

The following are the other important aspects of the licensing norms: 25 per cent of the branches should be located in rural or semi-urban areas, the registered office should not be located in major metros and the promoters' stake should come down to 40 per cent through equity issues.

Going by the original licensing norms, banks were required to enter the capital market after one year. Subsequently, the central bank diluted this clause as market regulator Securities & Exchange Board of India wanted banks to enter the market with a premium issue only when they have a three-year track record.

"We need to look into all these issues very closely," sources said. About 30applications have been pending with the RBI seeking licence to set up banks. Twelve industrial houses made presentations before the RBI brass two years ago. However, the central bank has not issued a single licence ever since the CRB Caps scam came into light. After issuing the in-principle licence to CRB Caps, the RBI withdrew it, following the scam.