MUMBAI: A committee headed by former Reserve Bank of India governor Bimal Jalan on new bank licences submitted a compilation of positive and negative aspects of granting licences to all 25 applicants without spelling out its preferences, said a person familiar with the matters.
The ball is now in the court of RBI governor Raghuram Rajan who has to decide on the number of licences and the identity of the licence recipients. The board of the central bank may meet on March 7 and is likely to discuss the issue with finance minister P Chidambaram who was keen on speeding up the process of new licences, a person who did not want to be identified said.
The group comprising former RBI deputy governor Usha Thorat, former Securities & Exchange Board of India chairman CB Bhave and former ICICI Bank executive director Nachiket Mor examined details submitted by the various regulatory agencies about these applicants.
Phone calls to Jalan and other members of the panel did not elicit any response.
Governor Rajan and the finance minister have been keen on granting licences to new bank applicants but the process has been delayed given that all the regulatory agencies have to present their views on the applicants. There was also political opposition in the form of a report by the Parliamentary standing committee on finance which objected to granting licences in what they termed as an arbitrary and subjective process.
Bajaj Finserv, Shriram Capital, India Post, LIC Housing Finance, L&T Finance and Aditya Birla Nuvo, controlled by the AV Birla Group were among the applicants. Investors were betting on some of the applicants getting the licence.
Shares of L&T Finance Holdings rose 3.86 per cent, LIC Housing Finance 3.23 per cent, IDFC 1.59 per cent and Bajaj Finserv 1 per cent. Shares of Reliance Capital were up 0.08 per cent while Aditya Birla Nuvo was down 0.38 per cent. The benchmark Sensex gained 0.20 per cent to 20,852.47 points. In contrast, bank index Bankex was down 0.08 per cent to 12259.48 points.
Apart from business houses like Birla, Bajaj and L&T, micro finance companies Bandhan and Janlakshmi and non-banking finance companies including IDFC have applied for the new banking licence. It is not clear on how many will get the licence. “I do not think we have any number in mind,” Rajan told ET in an interview earlier. “It could be zero. It could be 26.”