India has moved a step closer to issuing fresh bank licences, after a high-level advisory committee headed by former Reserve Bank of India (RBI) Governor Bimal Jalan submitted its recommendations to the central bank here on Tuesday.
Indications are that bank licences will be awarded in phases this time around.
The Jalan panel, which scrutinised 25 applications, is understood to have completed the background verification of all the applicants and recommended a roadmap to award licences to the eligible entities.
The advisory panel, appointed by the RBI, had begun evaluating the applications at its first meeting on November 1, 2013.
The RBI had initially received 27 applications but Tata Sons and Videocon Group’s Value Industries Ltd withdrew later.
KC Land & Finance was subsequently added to the list of applicants.
“Yes, yes..,” was Jalan’s response to Business Line when he was asked if the panel’s recommendations had been submitted to the RBI, after a nearly four-hour-long meeting.
He, however, declined to give details. The final call on who will make the cut is expected to be taken by RBI Governor Raghuram Rajan after consultations within the central bank and also with Finance Minister P Chidambaram.
The Finance Minister may hold a meeting on the Jalan panel’s recommendations on March 10.
The Election Commission’s Code of Conduct will have no bearing on the process of awarding of bank licences, official sources said.
The entire process of giving in-principle approval for the bank licences may get completed by end March.
The four-member Jalan panel looked into the reports of all government agencies, including the Central Bureau of Investigation.
There is a good mix of public and private sector aspirants in the fray.
The frontrunners for the first phase are LIC Housing Finance, L&T Finance and IDFC.
Anil Ambani Group, Aditya Birla Group, Religare Enterprises, Shriram Capital and Muthoot Finance are the other major groups in the running.
State-owned India Post and IFCI are also in the race for a bank licence, sources said.
In the past two decades, the RBI had 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, in 2003-04.
RBI board meeting
The Central Board of the RBI is scheduled to meet in New Delhi on March 7.
This will be a regular post-Budget meeting of the RBI Board and not meant for discussions on the Bimal Jalan panel recommendations, sources said.
The Finance Minister will address this meeting.