India to issue new bank licensing guidelines in May

Find out what it means for banks.

Guidelines will give interested firms time to file their applications for new banking licenses.

The Reserve Bank of India, the central bank, will likely issue on its website by early May clarifications on new bank license guidelines. RBI released guidelines for new bank licenses this February this year, asking those interested to submit applications by July 1.

RBI is expected to allow from four to five new players in an already highly competitive banking sector.

After July 1, RBI will make public names of all the interested entities. RBI last gave bank licenses a decade ago.

Sources said many of the clarifications could be related to interpretations of various clauses of the new bank license norms, since many would be applicants complain of the guidelines’ ambiguity.

Non-bank financial companies want to know whether RBI will allow conversion of all their Tier-1 branches and locations into bank branches in case of the transfer of their existing activities into various banking functions.

According to RBI's guidelines, firms eligible to apply for banking license include entities or groups in the private sector, entities in public sector and non-banking financial companies through a wholly-owned non-operative financial holding company.