After more than a decade RBI broke the ice and has decided to grant “in-principle” approval to two applicants to set up banks. They are IDFC Limited and Bandhan Financial Services Private Limited.
A press release from the apex bank said these applicants would set up bank “under the Guidelines on Licensing of New Banks in the Private Sector issued on February 22, 2013 (Guidelines).”
These two applicants were also recommended as suitable for grant of “in-principle” approval by the High Level Advisory Committee (HLAC) set up by the RBI. The HLAC had also recommended that in the case of Department of Posts which has applied for licence, it would be desirable for the RBI to consider the application separately in consultation with the Government of India. The RBI has accepted the recommendation of the HLAC.
The “in-principle” approval granted will be valid for a period of 18 months during which the applicants have to comply with the requirements under the Guidelines and fulfil the other conditions as may be stipulated by the RBI.
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. Until a regular licence is issued, the applicants would be barred from doing banking business.
The release is however silent on the issue of licencing of urban cooperative bank which is on the shelf for a long time.