No application yet to RBI for setting up new private banks: Govt

RBI had invited applications two months ago and the last date is July 1, 2013.

Last Updated: Apr 23, 2013, 18:40 PM IST

New Delhi: The Reserve Bank has not yet received any application for the setting up of more private sector banks under the new licensing norms released in February, Parliament was informed Tuesday.

RBI had invited applications two months ago and the last date is July 1, 2013.

"RBI has informed that as on date no applications for licence under the guidelines have been received and no licence has been granted under these new guidelines," Minister of State for Finance Namo Narain Meena said in a written reply in the Rajya Sabha.

To promote financial inclusion and further infuse competition in the banking sector, RBI had released 'Guidelines for Licensing of New Banks in Private Sector' on February 22.

Later, RBI asked all the interested parties to seek clarifications they might have on the issue by April 10.

Replying to another query related to the Department of Posts' proposal for providing banking services, Meena said RBI has informed that all commercial banks have been constituted by the government by various Acts of the Parliament.

"Hence, to set up the Post Bank of India (PBI) by an Act of Parliament, necessary legislation will need to be framed and passed by the Parliament.

"Or to set up the Post Bank as banking company, the same would require a banking licence from RBI as per the RBI's extant guidelines issued in February, 2013," he said.

RBI, he said, is of the view that it is useful to take up a detailed cost benefit analysis on the proposal.

In addition, viability and strategic study, market research, business plan and profitability analysis including business projections for next 4-5 years needs to be carried out to assess commercial viability of the project, he said.

Department of Posts has raised a proposal for setting up the PBI and providing banking services with a network of 1.55 lakh post offices with special focus on rural areas and financial inclusion.

As per the RBI guidelines, the entities and groups in the private sector that are owned and controlled by residents and entities in public sector are eligible to promote a bank through a wholly owned Non-Operative Financial Holding Company.

Promoters or promoter groups should be 'fit and proper' in order to be eligible to promote banks.