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More applicants have shown interest in applying for a bank licence, with only a couple of working days left to apply for new banks. Delhi-based Industrial Finance Corporation of India (IFCI), a company in which the government recently converted its debt into equity, on Thursday said its board has approved the proposal to submit an application to the Reserve Bank of India (RBI) for a bank license.
The Tourism Finance Corporation of India, in which IFCI has the majority stake, has also decided to apply for a bank license. Mumbai-based financial services firm India Infoline said its board has given the go-ahead for the license. Pune-based Bajaj Finserv said it had submitted the application to RBI yesterday and Bajaj Finance - its lending arm - would be converted into a bank as desired by RBI.
India Post plans to start banking operations in 50 branches, a key official told Business Standard. The official said all initial work on applying for a bank license to RBI had been completed and the only task left was to formally submit its application. With Thursday's announcements, the number of applicants who have either applied or wish to apply has gone up to 15. Yesterday, Reliance Capital and Religare had announced to rope in foreign partners for their bank ventures.
RBI's decision to allow new players in the banking sector has generated strong interest in corporate India, with large players like the Tata Group, Birla group and L&T expressing their interest to foray into the business.
Business houses like the Aditya Birla Group and Videocon Industries have already secured their respective boards' approvals for submitting the application. The Non-Banking Financial Company (NBFC) arm of engineering major L&T and Tata Capital - the NBFC arm of the Tata Group are in the process of obtaining approval.
Leading automaker, Mahindra & Mahindra Group, which was also keen to enter the sector through its NBFC arm, M&M Financial Services, however, decided not to apply, due to inadequate transition time to convert a large NBFC into a bank. Unlike NBFCs, banks have to comply with cash reserve ratio and statutory liquidity ratio requirements.
