You are here: Home » Finance » News » Banks
Business Standard

RBI seeks lenders' feedback on banking licence seekers

From business conglomerates to micro lenders had applied. New bank licences are being awarded after more than a decade

Neelasri Barman  |  Mumbai 

The Reserve Bank of India (RBI) has sought feedback from lenders on companies that have applied for a banking licence regarding their track record in servicing loans and end-use of funds.

After RBI released final norms for new licences in February 26 companies ranging from business conglomerates to micro lenders had applied. New bank licences are being awarded after more than a decade.

Before a high-level advisory committee, headed by former central bank governor Bimal Jalan, takes a final call, the applications are being screened by RBI to find out whether they comply with the ‘fit and proper’ criteria.

LONG ROAD
  • 1993: First set of guidelines on new banking licences issued; nine new entities allowed to set up banks
  • Dec 2012: The Lok Sabha passes Banking Laws (Amendment) Bill; move paves way for RBI to issue final guidelines
  • Feb 2013: Final norms issued
  • July 1, 2013: Deadline for filing applications for new banking licences

For the initial screening, the banking regulator has sought additional information from the aspirants, which includes additional balance sheet, source of funding, possible investors and their source of funding, among others.

“They have asked for a report on how these applicants are in terms of dealing with their lenders, repaying their loans and, in general, the opinion we hold about these applicants when it comes to day-to-day dealings with us,” said the chairman and managing director of a public sector bank.

The Muthoot group, which is also seeking a banking licence, told Business Standard recently that in their case, further scrutiny is being done by the regulator. “Just like any other applicant, we have been asked for further details on things we have presented. Instead of two years’ balance sheet, they want to see the last five years’. They have also asked some of our bankers for their views about us,” the group's managing director, George Alexander Muthoot, had said. There are which have lent money to the group based on the performance of their accounts, he added.

Minister P Chidambaram said on Friday he hoped the new banking licences, expected to be given in January, would be issued to applicants with innovative and different banking models.

“I sincerely hope that when the new banking licences are given in January 2014, some licences would at least go to the people who have come up with innovative and different models of banking addressed to meet the needs of specific segments of people. It would be a pity if the new licences also go to which clone existing I am confident that will not happen and innovative ideas and innovative banking will gain recognition by the licensing authority,” Chidambaram had said.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, November 20 2013. 00:46 IST
RECOMMENDED FOR YOU
.