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New licences maybe announced soon

The new banking licences may be announced in the next 10 to 15 days as the Election Commission has told the Reserve Bank of India to go ahead with the plan in spite of the elections happening in the country. There are 25 applicants for the licences including India Post, L&T Finance Holdings, Infrastructure Development Finance Co, Bandhan, Janalaxmi Financial Services, Reliance Capital, Aditya Birla Nuvo and Indiabulls group. The Election Commission felt that the Reserve Bank of India may take necessary action as deemed appropriate under provisions of the RBI Act, 1934 and other relevant provisions of the law. RBI had referred the matter to the Commission since the model code of conduct had come into place for the general elections before the bank could come out with the list. The RBI in its first bi-monthly Monetary Policy Statement for FY15 also said that after this round of licensing it would graduate to a system of on-tap licences that will also include differentiated bank licences. Currently, all banks in India have to follow the same universal model of being a banker to every income or interest group which makes setting up a bank a costly affair.

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