The country’s largest industrial group, Tata Sons, has withdrawn its application to set up a bank, dealing a serious blow to the government’s most ambitious plan for reform in the financial sector in years.
The group issued a statement on Wednesday saying its current non-banking finance company-led model best supported its 1,000-odd domestic and overseas companies with the help they needed.
The current round of licences are expected to be handed out before the general elections next year. The move has also been seen as a means to allow the domestic corporate sector to enter banking.
Tata, which has followed Mahindra out of the ring, made its decision at a board meeting earlier this week, sources said. Analysts said RBI Governor Raghuram Rajan’s statements that he would like to move away from a one-time acceptance of applications for bank licences, and that all banks needn’t follow the same model, might have given Tata reason to decide to wait for now.
“After prolonged deliberations and detailed analysis, Tata Sons has... decided to withdraw its application dated 1 July, 2013, from the current round of licensing,” the Tata statement said.