IDFC to seek licence from RBI for setting up bank

Infrastructure financing company IDFC today said the board has approved a proposal to seek licence from RBI for setting up a bank.

The board of the company at its meeting held today has approved a resolution for making an application to the Reserve Bank of India (RBl) for obtaining a banking licence, IDFC said in a filing on the BSE.

The licence would be sought based on the guidelines for licensing of new banks in the private sector dated February 22 and the associated clarifications issued by RBI on June 3, it said.

Shares of the company, which operates as an NBFC, closed at Rs 142.95 per unit, down by 1 per cent on the BSE.

Earlier this month, RBI while issuing clarification on new bank licence guidelines, said the entities getting licences to open new banks will be given 18 months to open branches against 12 months prescribed earlier, and promoters would have to transfer their holdings to the non-operative financial holding company (NOFHC) in a stipulated period.

The NOFHC envisages holding of the bank and other regulated financial services entities of the promoters under the NOFHC and prudential exposure norms for the regulated entities.

India has 26 public sector banks, 22 private sector banks and 56 regional rural banks.

Ten banks were licenced on the basis of guidelines issued in January 1993. The guidelines were revised in January 2001 based on the experience gained from the functioning of these banks, and fresh applications were invited.

Of the 10 licences issued in 1993, four banks merged with other lenders over a period of time. Times Bank merged with HDFC Bank, while Global Trust Bank was amalgamated with the state-owned Oriental Bank of Commerce.

Centurion Bank took over Bank of Punjab to become Centurion Bank of Punjab, which merged with HDFC Bank in 2008.