New banking licences in India: the way forward

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On 22 February 2013, the Reserve Bank of India (RBI) issued its guidelines for the licensing of new banks in the private sector. The guidelines had sought applications for new banking licences to be submitted to the RBI before 1 July 2013.

After the deadline of 1 July 2013 had passed, the RBI announced that a total of 26 applicants had expressed interest in the new banking licences. The applicants for these banking licences were from diverse backgrounds. Applicants ranged from non-banking financial companies (NBFCs), corporate houses, microfinance institutions and government entities.

The number of applicants has been fewer than the market had anticipated. The high barriers to entry and the regulatory requirements imposed by the guidelines may have discouraged a larger number of aspirants from seeking a banking licence…

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