Former RBI deputy governor Shyamala Gopinath will head a five-member panel set up by the Reserve Bank of India (RBI) to evaluate applications for prospective universal banks and small finance banks.

The other members of the standing external advisory committee (SEAC) include RBI central board director Revathy Iyer, National Payments Corporation of India chairman B Mahapatra, former Canara Bank chairman T N Manoharan and former Pension Fund Regulatory and Development Authority chairman Hemant Contractor.

After the RBI initially examines the eligibility of the applications, the SEAC, with a tenure of three years, will screen the proposals for universal banks and small finance banks.

“The Standing External Advisory Committee (SEAC) comprising eminent persons with experience in banking, financial sector and other relevant areas, will evaluate the applications thereafter. The tenure of this SEAC will be for three years,” the RBI said.

Last year, an internal working group of the RBI proposed allowing large corporate and industrial houses to float banks in India after suitable amendments to the Banking Regulation Act. The RBI has yet to announce its official position on the recommendations of the working group.

The proposal to allow corporate houses to float banking entities has found criticism from former RBI governor Raghuram Rajan and ex-deputy governor Viral Acharya on the ground that it would pose the danger of leading to “connected lending”.

In August 2016, the RBI had released the guidelines for on-tap licensing of universal banks issued in August 2016. In December 2019, the regulator had issued ‘on tap’ licensing norms for small finance banks.