International
Top industrial groups apply to RBI for new bank licences
Top industrial groups apply to RBI for new bank licences
Agencies/New Delhi
The Reserve Bank of India said yesterday that it had received 26 applications for new banking licences, in the first opening of the market in more than a decade. |
Large industrial groups have for the first time been allowed to apply, with the Tata group, Anil Ambani Reliance, engineering giant Larsen and Toubro and the Aditya Birla group taking advantage of the new regulations.
The application deadline expired yesterday, with licences set to be handed out from next March.
The Bajaj group, LIC Housing, Religare Capital Markets, Infrastructure Development Finance Company (IDFC), Edelweiss, India Infoline and Industrial Finance Corporation of India (IFCI) have also applied.
Other firms include SREI Infrastructure, Tourism Finance Corporation and India’s state-run postal department, which has 90% of its 154,822 branches in rural areas.
The promoters of Muthoot Finance Limited and non-banking finance company UAE Exchange India too have applied for licences.
Muthoot is India’s largest gold loan company.
“With our last mile connect into the rural hinterland, a banking licence will enable us to play a larger role of financial inclusion by taking these services to the unbanked and under-served population of the country,” managing director George Alexander Muthoot said.
The company has a network of 4,200 branches spread across 21 states and four union territories.
The UAE Exchange has 328 direct branches and 44,000 agents in 20 states.
“We are present in India since 1999 and also have a strong presence in all the countries from where NRIs remit money to their families in India. Our rich infrastructure, technological prowess and wide reach across the nation are our strengths. If given the licence, we would start our banking operations within the stipulated 18 months,” said UAE Exchange India chairman B R Shetty.
The new opening, overseen by the central bank, is aimed at pushing banking services into rural areas with the new lenders obliged to have at least a quarter of their branches outside of cities.
Only 8-10 of the applicants will be successful, with the RBI set to publish the list of applicants on its website in the next few days, according to a spokeswoman.
India’s banking sector is still dominated by state-run lenders and in the last 20 years only 12 private banks have been allowed to open.
The country has 26 public sector, 22 private and 40 foreign banks.
Indian conglomerate Mahindra and Mahindra which had initially expressed interest, opted out due to “disadvantageous” and unclear guidelines.
The new lenders, which have a minimum capital requirement of Rs5bn ($85mn), will also have to favour “priority” sectors of housing, agriculture and education.
About 480mn of India’s 1.2bn people, mostly living in the country’s 630,000 villages, currently have no banking access, according to the RBI.
To protect the new system, the RBI says that those seeking to set up a bank “should have a past record of sound credentials and integrity, be financially sound with a successful track record of 10 years.”