Wednesday, Feb 01, 2023

RBI gets 26 applications for bank licence

Finance: Tatas,Birla,Bajaj,Videocon,Anil Ambani group in the fray



THE Reserve Bank of India has received 26 applications for new banking licences until Monday,the deadline for making a pitch,with a mix of big corporate houses led by the Tatas,the Aditya Birla group,the Rahul Bajaj group,Videocon,the Anil Ambani group and Larsen & Toubro in the race to set up a commercial bank.

Others in the fray include a government department,state-owned firms,a handful of non-banking financial companies and a couple of microfinance institutions. Among those who have decided to give it a miss are Reliance Industries (RIL) and the Mahindra and Mahindra group.

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The applicants,a list released by the RBI said,include Tata Sons — the holding company of the $100 billion Tata group,Aditya Birla Nuvo Ltd,Bajaj Finserv of the Rahul Bajaj group,the Anil Ambani-controlled Reliance Capital,L&T Finance,Indiabulls Housing,Shriram Finance and Value Industries of the Videocon group.

The list also includes entities owned by the government or government-owned institutions such as the Department of Posts,LIC Housing Finance,IFCI and Tourism Finance Corporation of India.

Leading finance and investment firms India Infoline,JM Financial,Magma Fincorp,Religare,Srei Infra,Suryamani Financing,UAE Exchange and Financial,Muthoot Finance and IDFC have also applied.

Microfinance companies such as Kolkata-based Bandhan Financial and Janalakshmi Financial run by Ramesh Ramanathan are also in the race. INMACS Management Services,a management consultancy

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RBI gets 26 applications for bank licence

firm,is also seeking a banking licence.


The RBI had already indicated that it may not be possible to issue licences to all applicants meeting the eligibility criteria. “There is no predetermined number. RBI will be very selective while considering the applications for new bank licences. It will look for very high quality applications,” the RBI had said in a statement in June.

The central bank had already extended the validity of the in-principle licence nod from 12 months to 18 months but refused to indicate the timeline for giving in-principle approvals. Most applicants have been preparing the groundwork for getting a banking licence.

Some of them had roped in former PSU bank chiefs and JM Financial tied up with former Citibank chief Vikram Pandit. Reliance Capital recently said Japan’s Sumitomo Mitsui Bank and Nippon Life would become its strategic partners in the proposed banking venture with a 4-5 per cent stake each.


Religare Enterprises proposed to sell a 6 per cent stake to Customers Bancorp Inc for $ 51 million (about Rs 300 crore). The Mahindra group opted out of the race,saying that regulations might have an adverse economic and operational impact on the non-banking finance business.

After the in-principle approval is given by the RBI for setting up a bank,the promoter group has to set up a non-operative financial holding company (NOFHC) and the bank within 18 months from the date of in-principle approval. The bank has to commence banking business within this period after getting the banking licence.

The new entrants have to address financial inclusion,comply with priority-sector lending targets,and position 25 per cent of their branches in rural areas.

The new bank should also have a minimum voting equity capital of Rs 500 crore. However,where an NBFC is allowed to convert into a bank,it should have a minimum net worth of Rs 500 crore at all times,the RBI said.

All regulated financial services entities of the promoter group in which the promoter group has “significant influence” or “control” will have to be held by the NOFHC. At least 51 per cent of the voting equity shares of the NOFHC should be held by companies in the promoter group,in which public shareholding is not be less than 51 per cent. The NOFHC will have to be wholly owned by the promoter group,the RBI says.

First published on: 02-07-2013 at 05:35 IST
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