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The Reserve Bank (RBI) will soon set up a high-level panel of eminent experts from the banking and financial sector to screen applications of 26 aspirants for new banking licences.
The High Level Advisory Committee (HLAC) will not have any members from the RBI but will comprise of eminent persons with experience in banking, financial sector and other relevant areas, sources said.
It is expected that the member of this panel would be drawn from the other financial regulators like Irda, Sebi, PFRDA. Besides, some top official from the government may also be invited to join the committee.
In the 2001 round of guidelines for the new licences, the then-HLAC members were C G Somiah former CAG, I G Patel, former RBI Governor and Dipankar Basu former head of State Bank of India.
RBI, sources said, is currently screening the prima facie eligibility of the applicants including fit and proper criteria and other relevant parameters.
As RBI is continuing its scrutiny process, there will be change of guard at the central bank with Raghuram Rajan taking over as 23rd Governor on September 5. He will succeed the incumbent D Subbarao.
After the screening applications by the RBI they will be referred to the high level panel for their scrutiny. The panel will have its own procedures for screening the applications.
The Committee will reserve the right to call for more information as well as have discussions with any applicants and seek clarification on any issue as may be required by it. The Committee will submit its recommendations to RBI for consideration.
However, the decision to issue an in-principle approval for setting up of a bank will be taken by RBI.
In the last 20 years, the RBI licensed 12 banks in the private sector. This happened in two phases. Ten banks were licensed 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.
Kotak Mahindra Bank and Yes Bank were the last two entities to get banking licenses from RBI in 2003-04.
Tata Sons, India's biggest business group, and firms controlled by billionaires Anil Ambani and Kumar Mangalam Birla are among the 26 companies applied for a licence to open banks last month.
Among public sector entities, India Post and IFCI have submitted applications for bank licences. Micro finance institutions like Bandhan Financial Services, Janalakshmi Financial too expressed their intention to set up a bank.
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.
