7/27/2019 7 New Bank Licences Coming, Says FM

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BS REPORTER

Bangalore, 5 October

The suspense over the number

of new banking licences to beissued by the Reserve Bank of

India (RBI) has ended. FinanceMinister P Chidambaram said inBangalore on Saturday that the RBIwould shortly issue seven licences.

The announcement comes a dayafter RBI Governor Raghuram Rajanannounced the names of the threemembers who will assist former gov-ernor Bimal Jalan in the external com-mittee to vet the applications short-listed by the central bank. The Jalan

panel will propose the final slate tothe RBI central board.

Addressing a function at the StateBank of Mysore, Chidambaram saidthe new banks should not try tobecome clones of existing banks. Wedont want the seven of them to looklike each other with different mast-heads. We want each one of them tocater to the needs of a special group ofcustomers. You will have competition,efficiency and progress only if people

attempt different things and do thingsdifferently, he added.

Though the finance minister did-nt elaborate, the RBI had earliertalked about differentiated licensingon the lines of the US and Singapore.

Differentiated licensing could

enable specialists such as infrastruc-ture lenders or gold loan companies todo niche lending and get a regulatorytreatment different to what it is for exist-ing banks. The RBI had in August thisyear suggested that after years of a sin-gle-track approach to bank licensing,

it could consider differelicensing. With the broadeepening of the financial banks may choose to oper

areas. This has certain obvtages in terms of managiand also risk managementtries have a differentiated ing regime where dilicences are issued specificathe activities that the licecan undertake, an RBI pa

While Singapore has fikinds of licences, Hong three-tier structure. As firms, including top corposuch as Tata Sons, L&T, Rel

Aditya Birla Nuvo, Bajaj, SReligare have sought bankAmong public sector unitand IFCI have submitted aMicrofinance institutionBandhan Financial and JFinancial, too, have expres

On his first day in officsaid the licences would bJanuary next year. He sRBI intended to make tlicensing process "more fre

7 new bank licences comingChidambaram wants successful applicants to avoid being clones of existing banks

We dont want seven moreclones. We dont want the

seven of them to look likeeach other. Each one mustpursue a different path

P CHIDAMBARAM

Finance Minister

BLOOMBERG