Twenty six firms apply for new Indian baking licenses

New licenses to be granted by March 2014.

The Reserve Bank of India, the central bank, issued guidelines for Licensing of New Banks in the Private Sector on February 22 and came out with clarifications in the first week of June.

RBI is expected to grant new licenses by March 2014. It is, however, not clear as to how many new bank licenses will be issued.

RBI said firms getting licenses to open new banks will be given 18 months to open branches, and promoters would have to transfer their holdings to a non-operative financial holding company in a stipulated period.

Among the banking license applicants were firms linked to Tata Sons, India's biggest business group, and those controlled by billionaires Anil Ambani and Kumar Mangalam Birla.

Ambani's Reliance Capital has applied for a banking license along with Japan's biggest life insurer Nippon Life Insurance Co and Sumitomo Mitsui Trust Holdings Inc.

Among public sector entities, India Post and IFCI submitted applications as did micro finance institutions like Bandhan Financial Services, Janalakshmi Financial Services.

RBI Governor D Subbarao noted that not everybody who is fit and proper will be given a bank license because he expects “. . . the number of eligible applicants will be much larger than what is meaningful number of licenses we can give.”