The stage is finally set for the announcement of new banking licences with the Election Commission (EC) allowing RBI to issue in-principle approvals for prospective players.
The move comes after RBI missed the March-end deadline to grant new licences in nearly a decade.
It may be noted that the RBI during its first bi-monthly monetary policy meet on Tuesday said the EC nod was primarily to shield the announcement from any political controversy.
“This (issuing bank licences) is not in any way a political process. It is an economic and regulatory process and therefore seen as distant and different...we have to undertake what we have to undertake. I think one should respect all the (political) opinions that are expressed,” said Raghuram Rajan, Governor, RBI.
He added RBI would announce the bank licences quickly after taking it to the committee of the central board once the EC approves.
Meanwhile, RBI also said the central bank should make granting of licences an on-going process instead of every 10 years. Besides, there was also scope for having people with partial licences to come into the system, Rajan said.
“I will say quite soon that we hope to open the window. It may be that we open the window first for differentitated licences, for example, payment banks and then move to opening the on-tap for universal banks down the line. But the hope is to make it an ongoing process,” he said.
This will allow people to develop banking capabilities even with relatively small operations, which will then allow them to apply for full banking licences down the line.
The process was initiated in 2011 and RBI received 27 applicantions but Tata Sons Ltd and Value Industries Ltd withdrew.
Public sector units India Post and IFCI and private players such as Anil Ambani group and Aditya Birla group are among the 25 players in the fray for bank licences. Bajaj Finance, Muthoot Finance, Religare Enterprises and Shriram Capital have also applied.