New Banking License: Election Commission Clears Way for New Bank Licences

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New Banking License: Election Commission Clears Way for New Bank Licences

Election commission has given green signal for issue of new banking license. With this the road is now clear for setting up to new banks in the country. New banking licenses were to be issued by the end of March but EC has given permission now.

New Delhi: RBI wrote a letter to Election commission asking for its suggestions on whether they can take decision to issues licenses to new banks as the election code is now in implementation. Election commission asked for some clarification for which RBI responded. After going through all these, EC gave line clearance for issue of licenses.

Earlier RBI governor Rajan said that the process of issue of licenses for new banks will be speed up once they get the clearance of EC. He said they will try to issue the licenses as soon as possible after discussing in RBI board.

RBI invited applications for new banking licenses in July, 2013. Twenty seven companies belonging to private and government sector applied for licence. But later Tata group and Value industries withdraw their proposals and finally there are 25 companies in the race. There are government sector companies such as India Post, LIC Housing finance, IFCI, IDFC. Anil Ambani group, Aditya Birla group, L & T finance, Bajaj finance, Muthoot Finance, Religare enterprises, Sri Ram Capital are the private sector companies that applied for license.

A committee headed by RBI ex-governor Bimal Jalan scrutinized the applications and submitted their report which included the company names that are qualified for setting up new banks, it is said. There is information that India Post, LIC Housing Finance, L & T Finance, IDFC might be given the licenses to set up new banks. Four to five new licenses are expected to be issued.

In the last 20 years, RBI issued licenses for 12 private sector banks in two phases. In 1993 January, ten banks were given licenses as per the guidelines. ICICI bank, HDFC bank, Axis bank, Indusind bank, DCB bank, IDBI bank are among those who were issued licence.

RBI issued licenses for YES Bank, Kotak Mahindra bank were issued licenses in the year 2003-2004 financial year. after three years, RBI released guidelines for new banking licenses in 2013 February.

There are 26 government sector and 22 private sector banks in India presently. Apart from these 56 regional rural banks are also serving the customers. There are also 41 foreign banks and 46 foreign bank offices in India.