IDFC gets banking licence from RBI, to launch services by year-end

The Infrastructure Development Finance Company (IDFC Ltd)  on Friday declared on it's website that the Reserve Bank of India (RBI) had granted banking licence to the financial company making it the second lender after Bandhan Bank to enter the banking sector after more than a decade.

IDFC and Bandhan Financial Services Pvt Ltd emerged successful out of 25 contenders for new bank licences issued by the RBI in April last year. Bandhan Financial got RBI's approval last month.

IDFC's executive chairman, Rajiv Lall after receiving the final nof for the banking licence had said that the company plans to start operation from October 1 with an initial loan book of around Rs 55,000 crore with an estimated 20 branches. Of these 15 are expected to be in tier-VI cities with rest of the branches in New Delhi and Mumbai.

YES Bank was the last bank to be set up in 2004. Bandhan said in June it would launch banking operations in August.

Millions of people in India do not have access to formal banking services. The move to grant new permits marked the start of a cautious experiment to create more competition in a sector dominated by state lenders many of which are reluctant to expand into rural areas or towns where banking penetration is low.

At 11:00 am, shares of IDFC were up 3.7 per cent at Rs 159 on the NSE.