Fintotal News Analysis | Tata, Birla, Reliance, Bajaj and 22 Others in RBI New Banking License Fray
Tata, Birla, Reliance, Bajaj and 22 Others in RBI New Banking License Fray
Ruby Jacob, 02 Jul 2013

The list of applicants for new private bank license is out. In all 26 Corporates and NBFCs have applied to RBI for getting licensed as a bank.

Among the applicants are some of the top Corporates of the country who have applied through their subsidiaries, a couple of NBFCs as well as the Department of Posts. One of them, Value Industries Ltd of Aurangabad withdrew application.

List of new private bank applicants

  1. Aditya Birla Nuvo Ltd, Mumbai
  2. Bajaj Finserv Ltd, Pune
  3. Bandhan Financial Services Pvt Ltd, Kolkata
  4. Department of Posts, New Delhi
  5. Edelweiss Financial Services Limited, Mumbai
  6. IDFC Limited, Mumbai
  7. IFCI Limited, New Delhi
  8. Indiabulls Housing Finance Limited, New Delhi
  9. India Infoline Ltd, Mumbai
  10. INMACS Management Services Limited, Gurgaon
  11. Janalakshmi Financial Services Pvt Ltd, Bangalore
  12. J M Financial Limited, Mumbai.
  13. LIC Housing Finance Ltd, Mumbai
  14. L & T Finance Holdings Limited, Mumbai
  15. Magma Fincorp Limited, Kolkata
  16. Muthoot Finance Limited, Kochi
  17. Reliance Capital Limited, Mumbai
  18. Religare Enterprises Limited, New Delhi
  19. Shriram Capital Limited, Chennai
  20. Smart Global Ventures Pvt Ltd, Noida
  21. SREI Infrastructure Finance Limited, Kolkata
  22. Suryamani Financing Company Limited, Kolkata
  23. TATA Sons Limited, Mumbai
  24. Tourism Finance Corporation of India Limited, New Delhi
  25. UAE Exchange & Financial Services Ltd, Kochi
  26. K C Land & Finance Ltd, Chandigarh

RBI revised its guidelines on new bank licensing in order to make room for new banks after Finance Minister in 2010-11 advocated entry of new private sector banks to bring financial inclusion.

The postal department was an expected candidate to join the fray as it already provides a number of financial services through its network and has reach in the corners of the country. Bandhan Financial Services is an NBFC Micro Finance Institution primarily working amongst women.

RBI norms for new banking license have been very stringent in terms of structure of holding company of the new bank and other operational requirements. It had barred private companies having 10% or more of their income and assets from real estate in the last 3 years put together from contending for new private bank license. The promoter group of the new bank should have had minimum 10 years of successful track record.

Though RBI has not clarified how many of these will eventually bag the new banking license, it has made clear that it will award it to only highly qualified applicants. Experts think 3-4 applicants may end up getting the banking license. RBI has not disclosed any time frame for granting new licenses but it is expected that new licenses will be awarded by end of 2013-14.

As a customer, entry of new banks in the banking space will benefit you as they raise the general level of services due to increased competition. The last time RBI licensed new private banks was in 2001 when 2 banks were given the banking license and before that in 1991 with 10 banks getting banking license. They did not however go a long way in expanding banking network in non-urban areas. Hopefully this time around RBI will succeed in achieving the goal of widening the banking network in rural and unbanked areas for improving financial inclusion.

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