Tata, Ambani, Birla among 26 in race for bank licence
Mumbai: Tata Sons, India's biggest business group, and firms controlled by billionaires Anil Ambani and Kumar Mangalam Birla are among the 26 companies that have applied for a licence to open banks.
Ambani's Reliance Capital has applied for a banking licence along with Japan's biggest life insurer Nippon Life Insurance Co and Sumitomo Mitsui Trust Holdings Inc.
Former Citigroup Inc chief executive Vikram Pandit has teamed up with JM Financial Ltd.
Among public sector entities, India Post and IFCI also submitted applications for bank licence while micro finance institutions like Bandhan Financial Services, Janalakshmi Financial Services too expressed their intention to set up a bank.
"The Reserve Bank of India in all received 26 applications," the central bank said after the deadline for applying for a bank licence expired today.
The RBI had issued guidelines for 'Licensing of New Banks in the Private Sector' on February 22 and came out with clarifications in the first week of June.
It is, however, not yet clear how many new bank licences will be issued.
RBI Governor D Subbarao had earlier said that "our effort will be to make that judgement as transparent as objective as contestable as possible...I want to say that not everybody who is fit and proper will be given a (bank) licence because we expect the number of eligible applicants will be much larger than what is meaningful number of licences we can give".
In its clarification, the RBI had said the entities getting licences to open new banks will be given 18 months to open branches, and promoters would have to transfer their holdings to the non-operative financial holding company (NOFHC) in a stipulated period.
The NOFHC envisages holding of the bank and other regulated financial services entities of the promoters under the NOFHC and prudential exposure norms for the entities.
The Reserve Bank is expected to grant new licences by March next year.
Financial Services Secretary Rajiv Takru had said that he expected new bank licences to be issued by the end of March next year.
"I think with all going well, with all clearances, by end of the financial year (2013-14) we will see some success," he had said.
Takru had said the RBI guidelines aim to "ensure that only responsible people enter the (banking) space".
When asked if public sector entities hold edge over private corporates, he had said there will be a level-playing field and RBI would not show favour to any entity.
Entities which did not apply for bank licence were Power Finance Corporation, Sahara India, SKS Microfinance. Almost a week before the deadline, Mahindra Finance too opted out of process.
India has 26 public sector banks, 22 private sector banks and 56 regional rural banks.
Ten banks were licenced on the basis of guidelines issued in January 1993. The guidelines were revised in January 2001 based on the experience gained from the functioning of these banks, and fresh applications were invited.
Of the 10 licences issued in 1993, four banks merged with other lenders over a period of time. Times Bank merged with HDFC Bank, while Global Trust Bank was amalgamated with the state-owned Oriental Bank of Commerce.
Centurion Bank took over Bank of Punjab to become Centurion Bank of Punjab, which merged with HDFC Bank in 2008.