No ceiling on new bank licences: Chidambaram

02 Jul 2013

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Finance minister P Chidambaram today said there is no ceiling on the number of new banks that could be permitted even as the number of private sector companies that have applied for bank licence reached 26 as the RBI deadline for receiving applications ended at 5:45 pm on Monday.

While the Reserve Bank of India (RBI) also did not specify the number of new bank licences that could be issued in the latest round, it was e\widely expected that the number of new banks that would be permitted to operate could at the most by three or four.

"I don't think there is a ceiling. I don't think there is a number in mind. It all depends upon how many applicants are eligible applicants. The fact that somebody applies doesn't mean he is an eligible applicant," he said in an interview.

"If there are very few eligible applicants, then the number of banks that will get licences will also be few. I don't think that the governor (RBI) has any ceiling in mind," he said.

He said the country needed to nurture bigger banks while also increasing the number of banks or bank branches to achieve greater financial inclusion.

"A large number of banks will mean more competition and a quicker reaching into the country and faster financial inclusion.

"Large banks will mean that we are able to finance large projects using our own bank resources rather than depending upon foreign bank resources. So, both are required in this country," he said.

RBI had on Monday released a list of 26 entities, including Tata Sons, LIC Housing Finance, Aditya Birla Nuvo, Department of Posts, Reliance Capital, L&T Finance and Bajaj Finserv that have applied for bank licences (See: Tata Group among 26 applicants for new bank licences).

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