The Tata Group has decided to pull out of the race for a new banking licence becoming the second major corporate house after Videocon's Value Industries to do so indicating that the guidelines set by the Reserve Bank of India may be difficult to comply with.

The announcement came in the form of a press release issued by the apex bank on Wednesday evening.

The Group's withdrawal indicates that conforming to the apex bank's guidelines would affect the financial performance of its other businesses.

"Tata Sons Limited has withdrawn its application made on July 1, 2013 for a new bank licence. The company has indicated that its current financial services operating model best supports the needs of the Tata Group’s domestic and overseas strategy, and provides adequate operating flexibility to its companies, while securing the interests of the Group’s diverse stakeholder base. The Reserve Bank has accepted withdrawal of the application," RBI said in its release.

It further said that the Group’s withdrawal request has been accepted.

This now leaves only 24 out of the initial 26 applications still in the fray which includes only two major corporate houses- the Aditya Birla Group and the Reliance Group. Videocon’s Value Industries had withdrawn its application in September.

The Reserve Bank of India had decided to rope in more private players in the sector so as to further its goal of financial inclusion. Even today, over five lakh villages continue to remain out of the banking fold.

The apex bank governor Raghuram Rajan has said that the new banking licences will be issued by January next year.