)
The advisory committee headed by former Reserve Bank of India (RBI) governor Bimal Jalan for vetting applications to establish new banks held its second meeting on Monday.
The committee is to eliminate applicants which do not meet the ‘fit and proper’ criteria for getting a licence. It is expected to complete the entire process in three months.
The committee also has former RBI deputy governor Usha Thorat, former Securities & Exchange Board of India chairman C B Bhave, and a member of the central board of directors in RBI, Nachiket M Mor.
The first meeting was on November 1. The panel is likely to give emphasis on the promoter group and its activities, considering steps proposed by applicants to ring-fence the proposed banking venture from other businesses of the promoter group, to avoid conflicts of interest.
The panel has asked agencies such as the Central Vigilance Commission and Central Bureau of Investigation to do a background check on all the applicants. RBI has additionally asked for information relating to sourcing of funds of the promoter group, income tax records, funding sources and the record of various group companies, and balance sheets for more years, among others.
RBI Governor Raghuram Rajan had earlier set a January deadline for awarding of licences but this might take a little longer, as the central bank is still collating information on the applicants. Recently, Jalan had said the panel would send a shortlist of applicants three months after RBI finishes its scrutiny. He had added the committee did not want to rush into any decisions.
Initially, 26 entities had evinced interest in entering the banking arena. Tata Sons, holding company of the Tata group, withdrew its application last month, leaving 25 in the fray.
Other applicants include L&T, the Anil Ambani-led Reliance Group, Aditya Birla Group, Bajaj, SREI, Religare, LIC Housing Finance, JM Financial, Muthoot Finance, Edelweiss, IDFC, India Infoline, Shriram Capital, Indiabulls, India Post and IFCI.
RBI issued guidelines for licensing of new banks in February 2012 and issued clarifications in the first week of June this year. In the past 20 years, RBI licensed only 12 banks in the private sector, in two phases. Ten banks were licensed on the basis of guidelines issued in January 1993.
