Established: August , 1996
Paid-up Capital: 5 cr
CAR >= 9% (It will be 15 % in 3 to 4 years)
Features and Objective:
- The intention of the government was to set up new private local banks with jurisdiction over two or three contiguous districts
- They are licensed under the Banking Regulation Act, 1949
- The Local Area Banks are the only type of Non-scheduled Banks of India.they are eligible to be included in the Second Schedule of the RBI Act 1934 subject to eligibility criteria of RBI.
- The promoters could be individuals, firms or societies. The family of the individual promoters was not allowed to keep more than 40% of the equity capital of the banks. The NRI promoters could not exceed more than 20% of total number of promoters.
- Each Local Area Bank is allowed to open branch in only one urban centre per District and rest of the branches were allowed to be opened in the rural and semi urban centers subject to requisite clearance in respect of rural branches from the District Consultative Committee.
Current Functioning Local Area Banks in India
There are 4 Local Area bank as of 2015.
There are only four Local Area Banks (LAB) in India, which exist in the form of Non-scheduled banks. They are as follows:
Coastal Local Area Bank Ltd
This bank was established on 27th December 1999. Its area of operation includes three contiguous districts viz. Krishna, Guntur and West Godavari. Its head office is located at Vijayawada in Andhra Pradesh.
Capital Local Area Bank Ltd
This bank was established on 14th January 2000. Its area of operation includes three districts viz. Jalandhar, Kapurthala and Hoshiarpur in Punjab. The head office is at Phagwara (Punjab).
Krishna Bhima Samruddhi Local Area Bank Ltd
This bank was established on 28th February 2001 with an area of operation comprising three contiguous districts of Mahbubnagar in Andhra Pradesh and Raichur and Gulbarga in the state of Karnataka with its head office at Mahbubnagar(Andhra Pradesh).
Subhadra Local Area Bank Ltd., Kolhapur
This is smallest Local Area Bank with only 8 branches. Its head office is in Kolhapur.