03 April,2014 08:17 AM IST | | Agencies
The Reserve Bank of India (RBI) grants “in-principle” approval to IDFC Limited and Bandhan Financial Services Private Limited to set up new banks
Mumbai: The Reserve Bank of India (RBI) on Wednesday granted "in-principle" approval to IDFC Limited and Bandhan Financial Services Private Limited to set up new banks, with some big guns failing to make the cut.
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As many as 27 companies were in the fray for new banking linceces, including some top corporate houses like Tata Sons, L&T, Reliance Group, Bajaj, Shriram and Religare.
"After withdrawal by two applicants, 25 applications have been considered," the RBI said, adding that those whose applications had been rejected could reapply.
The "in-principle" approval granted will be valid for 18 months, during which the applicants have to comply with the requirements under the guidelines and fulfill the other conditions as may be stipulated by the RBI, the central bank said in a statement.
"On being satisfied that the applicants have complied with the requisite conditions laid down by the RBI as part of 'in-principle' approval, they would be considered for grant of a licence for commencement of banking business under Section 22(1) of the Banking Regulation Act, 1949," the RBI said.
"Until a regular licence is issued, the applicants would be barred from doing banking business," it added.
The RBI it assessed the "quantitative and qualitative aspects" of the applicants as per the criteria laid down in the Guidelines.
This included analysis of the financial statements of the key entities in the group, 10 year track record of running their businesses, proposed business model for the bank as well as the applicants' demonstrated capabilities for running a bank, plan for expanding inclusion, and culture of compliance and integrity demonstrated by the applicant in its past activities.
Based on all this, the RBI took a view of the "fit and proper" status of the applicant, the central bank said.
"RBI believes that some of those entities who did not qualify in this round for a full-fledged banking licence could well apply in future rounds or could apply for differentiated licences under the proposed framework," it said.
The decision to grant "in-principle" approval has been taken after consulting the Election Commission, given that the Code of Conduct for the coming elections is in force, the central bank added.
