Bimal Jalan panel submits recommendations on new bank licences

The Bimal Jalan Committee, which scrutinised applications for new bank licences, today submitted its report to the Reserve Bank of India.

Emerging out of a nearly four-hour long meeting in the capital, Jalan confirmed that he had submitted the report. He, however, declined to elaborate or comment on the recommendations.

"We have submitted report (on new bank licences) to RBI," Jalan, a former governor of the RBI, said after the meeting.

The licences are likely to be awarded my March-end and the election code of conduct will not affect the process, banking secretary Rajiv Takru said.

RBI had earlier indicated that non-banking financial companies (NBFCs), which already own an existing financial services network, are likely to get priority in the award of banking licences.

Analysts said IDFC and LIC Housing Finance were among the favourites to win licences as of now.

India Post as also state-run IFCI have also applied for banking licences (See: Department of posts must get banking licence, says Sibal).

Anil Ambani's Reliance Group, Aditya Birla Group and Bajaj Finance are some of the prominent names in the race.

NBFCs Muthoot Finance, Religare Enterprises, L&T Finance Holdings, India Bulls Housing Finance Ltd are among the other companies who have applied for licences.

There are 25 active applicants in the fray after the Tata Group that had initially shown interest in entering the banking sector, withdrew its application in November 2013 (Tatas opt out of race for banking licence).

Among others who have opted out of the race for banking licences include Mahindra & Mahindra Financial Services and Value Industries Ltd (a unit of Videocon Industries Ltd).

Under RBI's licensing policy, new banks have to open one in four branches in rural areas and fulfil statutory reserve requirements, including placing 4 per cent of deposits with the central bank and holding 23 per cent in government bonds from inception. They will have to allocate 40 per cent of advances for priority-sector lending after three years.

It was not immediately known how many applicants have been shortlisted by the high-level advisory panel.

The committee started evaluating applications at its first meeting on 1 November 203.

Other members of the committee are former RBI deputy governor Usha Thorat, former Securities and Exchange Board of India chairman C B Bhave and Nachiket M Mor, who is a member of RBI's central board of directors.

RBI had, in the past 20 years, licensed 12 banks in the private sector in two phases.

Kotak Mahindra Bank and Yes Bank were the last two entities to get banking licences from the RBI in 2003-04.