RBI guidelines on new banking licences by March-end

The Reserve Bank of India (RBI) will issue guidelines for new banking licences by the end of the current fiscal.

"RBI is planning to issue the guidelines for banking licences before the close of this financial year," Finance Minister Pranab Mukherjee said today during his presentation of the Budget 2011-12.

In the last Budget, it was announced that the Reserve Bank of India would consider giving traditional banking licences to private sector players, he said.

Following the announcement made by the Finance Minister, the Reserve Bank had brought out a discussion paper in August, 2010, on giving out new banking licenses to business houses and non-banking finance companies, besides regulations for the same to foster greater competition.

The RBI also sought to know "whether industrial and business houses could be allowed to promote banks." Furthermore, it sought stakeholders' views on whether NBFCs should be allowed to convert into or promote banks.

The RBI has received comments on its discussion paper from all stakeholders.

Various entities like Reliance Capital, IndiaBulls, Religare, IL&FS, IDFC, IFCI and Aditya Birla Financial Services are reported to be mulling entering the banking space.

At present, India has 26 public sector banks, seven new private sector banks, 15 old private sector banks, 31 foreign banks, 86 regional rural banks, 4 local area banks, 1,721 urban cooperative banks, 31 state cooperative banks and 371 district central cooperative banks.