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Banking licence

With both houses of Parliament clearing the The Banking Laws Bill, 2011, and to be effective shortly, the Reserve Bank of India will soon embark on the process of issuing final guidelines and seeking applications for the issuance of new licences.

With both houses of Parliament clearing the The Banking Laws (Amendment) Bill, 2011, and to be effective shortly, the Reserve Bank of India will soon embark on the process of issuing final guidelines and seeking applications for the issuance of new licences.

Since the first set of licences were issued, in 1993, the new private sector banks have changed the face of banking, right from customer service to technology, and have created immense shareholder value. Moreover, RBI?s second round of licencing in 2001 has been more successful in terms of value creation and at a lower risk for the system as a whole.

A Citi Equities Research report says, for a lot of successes, the entire process has not been without its challenges as there have been a few failures, a few forced mergers and bail-outs and practices that have meant that the central bank has been more careful with its bank licensing.

The analysis says there will be lot of interest for new bank licences amongst existing financial sector companies?non-banking financial companies, corporate-backed finance companies and industrial and business groups with various interests. It highlights some of the players (see chart 4) who have expressed an interest in a banking licence. It also says there will be some enhanced interest in mergers and acquisitions as new banks will seek to scale up.

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First published on: 22-12-2012 at 02:26 IST
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