Indian Central Bank Prepares To Screen New Bank Applications - Report

Vanessa Doctor

19 November 2013

The , the Indian central bank, will be having the first-level screening of applications to set up new private banks in the country on 16 December 2013, according to media reports.

In the last 20 years, the RBI has given out 12 private sector bank licences, with Kotak Mahindra and YES Bank being the latest recipients. For the upcoming screening, 26 applicants are reportedly seeking a slot, including Reliance Gruop, Aditya Birla, Religare, JM Financial, Edelweiss, IDFC, Shiram Capital and L&T.

Raghuram Rajan has reportedly set a January deadline for awarding licences. But reports say this will face delays as the central bank is still gathering information on the applicants.

"Due diligence work is being done by RBI. By mid-December, we will get the proper status of all applications. At that stage, we would know where we are and the first-level screening would be conducted," wrote the Business Standard, citing an anonymous source.

The screening committee is composed of Usha Thorat, former RBI deputy governor, C B Bhave, former Securities & Exchange Board of India chairman, and Nachiket M Mor, director of RBI's central board of directors.

The RBI's actions come at a time when India has also moved recently to open up the country's market to foreign banks, a move that has drawn protests from staff in domestically-owned banks. The RBI relaxed rules for foreign banks wanting to expand their business in the country in early November 2013 in a bid to boost capital inflows and competition. The central bank has said it will put foreign financial institutions on a level with local lenders if they adopt a wholly-owned subsidiary structure. However, certain restrictions on foreign banks will remain.