RBI will issue seven banking licences, says finance minister

Finance Minister P Chidambaram has said the country’s banking regulator is expected to issue seven licences.

According to reports, Chidambaram, who was speaking at an event, said new banks should not try to become clones of existing ones. “We don’t want the seven of them to look like each other with different mastheads. We want each one of them to cater to the needs of a special group of customers. You will have competition, efficiency and progress only if people attempt different things and do things differently,” he said.

The announcement comes a day after the Reserve Bank of India (RBI) announced the names of three renowned members who will assist former governor Bimal Jalan in the external committee that would vet the applications shortlisted by the central bank.

In July this year, the central bank announced the list of banking aspirants. As many as 26 firms, including top corporate houses such as Tata Sons, L&T, Reliance Group, Aditya Birla Nuvo, Bajaj, Shriram and Religare sought banking licences. Among public sector units, India Post and IFCI submitted applications. Microfinance institutions such as Bandhan Financial and Janalakshmi Financial, too, expressed interest.

Unlike, when Yes Bank and Kotak Mahindra Bank were given banking licences in 2004, the RBI’s norms for sanctioning such licences were expected to be strict, as the banking industry has gone through a tumultuous period over the last few years (only some private banks such as ICICI Bank, Axis Bank and HDFC Bank that have been successful in building good assets over the years have proved to be aberrations).

(Edited by Joby Puthuparampil Johnson)

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