Banking regulator, Reserve Bank of India is about to get strict with those private sector banks which still have large promoter holdings as it is about to set norms for new banking licenses which are to be quite tough.

The discussion paper on norms for new banking licenses would be coming by the end of this week or beginning of August.

"It is expected that RBI will consider this issue (promoter holding in private banks). As the regulator for banking industry, it will solely be RBI's decision, however, two set of rules cannot co-exist," said a senior finance ministry official.

"There are concerns that large industrial houses may misuse the banking licences but if there are existing cases then we also expect a similar lenient approach," said a senior official of a company.

Currently three private sector banks namely Yes Bank, Kotak Mahindra Bank and IndusInd Bank have huge promoter holding which is against RBI norms.

"The new bank should not be promoted by a large industrial house. However, individual companies, directly or indirectly connected with large industrial houses may be permitted to participate in the equity of a new private sector bank up to a maximum of 10% but will not have controlling interest in the bank," the rules say.