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The Bimal Jalan committee, which is scrutinising applications for new bank licences, submitted its report to the Reserve Bank of India (RBI) on Tuesday. Now, the final decision will be taken by the central bank.
The banking regulator was expected to issue new licences by March 31, Rajiv Takru, secretary, financial services, told Business Standard in a recent interaction.
After securing RBI’s in-principle approval, an applicant will get a year and a half to set up banks, failing which their licences will be cancelled.
RBI had constituted the Jalan committee to examine the “fit and proper” criteria, business plans, corporate governance practices, etc, of applicants.
Other members of the committee are former RBI Deputy Governor Usha Thorat, former Sebi chairman C B Bhave and Director of RBI’s central board of directors Nachiket M Mor.
On September 4, the day Raghuram Rajan had taken charge as the RBI governor, he had announced the process to award new bank licences would be finalised in January, around the time Anand Sinha retired as deputy governor of the central bank. Sinha was looking after the process to award new bank licences.
However, as the scope of the work increased considerably, it was planned the licences would be awarded by March-end.
Initially, 26 entities had shown interest in foraying into banking. Subsequently, Tata Sons, the holding company of the Tata Group, and Videocon group’s Value Industries withdrew their applications. However, RBI later added KC Land & Finance to the list of applicants, bringing the total to 25.
A host of entities — from business conglomerates to micro-lenders — have applied for bank licences. The list includes public sector undertakings India Post and IFCI, private entities Reliance Group and Aditya Birla Group.
Bajaj Finance, Muthoot Finance, Religare Enterprises and Shriram Capital have also applied for licences.
