Jalan committee submits report on new bank licences

The final announcement by the RBI is likely to be made in March

GN Bureau | February 25, 2014




After having missed the January deadline, the Reserve Bank of India may grant licences to new banks in March as the Bimal Jalan committee submitted its recommendations to the apex bank on Tuesday.

"We have submitted report (on new bank licences) to RBI," said Jalan, who once headed the RBI in late 1990s and 2000s for two terms.

For the last four months, the committee has been scrutinising 25 applications. However, the names have not been disclosed by the committee comprising former RBI deputy governor Usha Thorat, former Securities and Exchange Board of India chairman C B Bhave and Nachiket Mor, director on the apex bank’s central board.

Speaking to Governance Now, S S Mundra, CMD Bank of Baroda, said, “It is not like we did not have enough competition already with the presence of banks, MFIs, NBFCs, etc. Also, the competition has gone up in the last two years with banks coming out with newer models and have done significant work. The newer players will definitely add more competition and this will be good for all of us to continuously improve and better ourselves.”

However, R K Dubey, CMD, Canara Bank has said that there is so much space and scope in the Indian market for everybody that the arrival of private banks will not be competition and will enhance financial inclusion only if all the players do it with passion.

The RBI had issued guidelines for the licence of new banks in February last year. IDFC, LIC Housing Finance, Anil Ambani's Reliance Group, Aditya Birla Group, Bajaj Finance, Muthoot Finance, Religare Enterprises, L&T Finance Holdings, India Bulls Housing Finance are among the companies who have applied for licences. In addition, applications were received from two public sector groups – IFCI and India Post.

According to the guidelines by RBI, the new banks will have to open 25 percent of their branches in rural areas, a move which could provide a major boost to the financial inclusion agenda.

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