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The four-member advisory committee, headed by former Reserve Bank of India Governor Bimal Jalan, which is to vet the new bank licence applications, will complete the process in three months, sources said.
The panel held its first meeting in New Delhi on Friday, to discuss the process. All the panel members — Jalan, Usha Thorat, former RBI deputy governor; C B Bhave, former chairman of the Securities and Exchange Board of India, and Nachiket Mor, board member of RBI, attended. RBI Deputy Governor Anand Sinha, who prepared the licence norms, also participated.
“We discussed everything. The focus was on how to go about the processes and the parameters for the screening,” said a person privy to the discussion.
Sources indicated the panel would give emphasis on the promoter group and their activities and consider the steps proposed by applicants to ringfence the proposed banking venture from other businesses to avoid conflicts of interest.
Final guidelines on the new licences were issued in end-February. The applicants range from business conglomerates to micro lenders. This is the first time in a decade that new banks will be allowed. It is also the first time that business houses are being considered.
At present the central bank is checking the primary eligibility of all the 26 applicants. Once the process is completed, comments will be passed on to the Jalan panel.
The Reserve Bank has called for additional information from the aspirants on issues relating to their promoters and group companies.
Sources said RBI asked for information relating to sourcing of funds of the promoter group, income tax records, funding sources and record of various group companies, and balance sheets for more years, among others. RBI has also asked for the source of funds for entities which plan to invest up to five per cent stake in the proposed banking entity.
Though RBI Governor Raghuram Rajan earlier said he wanted the licence awards to be announced around January, the process is expected to take some more time because of the additional information sought.
A decision on the Jalan recommendations will be taken by RBI alone. Applicants are to get 18 months to set up a new bank after the in-principle approval.
