New bank licenses after EC approval: Rajan

 The Reserve Bank of India will issue new bank licences in a few weeks after seeking approval from the Election Commission (EC), Governor Raghuram Rajan said on Friday.

The RBI had got 27 applications for new banking licence, including L&T Finance Holdings Ltd and Reliance Capital Ltd. Two of the applicants — Tata Sons Ltd and Value Industries Ltd--have since withdrawn their applications.

“My sense is, if all goes well we should be able to do it in a few weeks,” RBI Governor Raghuram Rajan told reporters after Finance Minister P Chidambaram addressed the central bank’s board meeting.

Rajan, however, added that the RBI would seek formal approval from the EC before issuing the licences as the model of code conduct is in force.

Guidelines for setting up new private banks were issued in February 2013. The last day for applications was July 1.

Besides, LIC Housing Finance, Aditya Birla Nuvo, the Department of Posts,  Bajaj Finserv, Bandhan Financial Services, Edelweiss Financial Services, IDFC, IFCI, Indiabulls Housing Finance, India Infoline, INMACS Management Services, Janalakshmi Financial Services, JM Financial and Muthoot Finance have also applied for licences.
In the past 20 years, the RBI has licensed 12 banks in the private sector in two phases. Ten banks were licensed on the basis of guidelines issued in January 1993.

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

Chidambaram said he had made no recommendations to the RBI, which had appointed the Bimal Jalan Committee to scrutinise the applications.