Raghuram Rajan with RBI staff after taking over as the 23rd governor of the central bank. PHOTO: AP
Newly appointed Reserve Bank of India Governor Raghuram Rajan has clarified that the central bank will issue new bank licences by January 2014.
Rajan, who on Wednesday took charge as the 23rd Governor of the central bank, said an external committee headed by former RBI governor Bimal Jalan will screen licence applications and the decisions will be largely based on the recommendations of that committee.
"I hope to announce the licences within, or soon after, the term of Deputy Governor Anand Sinha who has been shepherding the process. His term expires January 2014," Rajan told the media after taking charge from Duvvuri Subbarao.
As many as 26 firms, including top corporate houses like Tata Sons, L&T, Reliance Group, Adiya Birla Nuvo, Bajaj, Shriram and Religare, have sought banking licence. The last day for application was July 1.
Noting the fair amount of public attention to new bank licences, Rajan said "the RBI will give out new bank licence as soon as consistent with the highest standards of transparency and diligence."
Referring to the screening of bank licence applications, Rajan said: "We are in the process of constituting an external committee. Dr Bimal Jalan, an illustrious former Governor, has agreed to chair it and the committee will be composed of individuals with impeccable reputation."
This committee will screen licence applicants after an initial compilation of applications by the RBI staff, he said, adding that the external committee will make recommendations to the Governor and deputy governors, who will propose the final slate to the Committee of the RBI central board.
Rajan said the RBI intended to make the banking licencing process "more frequent".
In the past 20 years, the RBI has licensed 12 banks in the private sector in two phases. Ten banks were licensed on the basis of guidelines issued in January 1993.
The guidelines were revised in January 2001 based on the experience gained from the functioning of these banks and fresh applications were invited. Kotak Mahindra Bank and Yes Bank were the last two entities to get banking licenses from the RBI in 2003-04.