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India’s Reliance Capital says Japan’s Sumitomo Mitsui Bank and Nippon Life will become its strategic partners in applying for a mainstream banking licence.
Each of the two foreign partners will have a four to five per cent stake, subject to regulatory approvals, said a statement from the company.
Reliance Capital, currently present in a host of non-banking financial services businesses, will be the main promoter of the proposed bank, and the application will soon be submitted to the Reserve Bank of India (RBI), said Reliance Capital.
Applications for the new Indian banking licence need to be submitted by July 1 with the RBI.
The Indian finance ministry has announced that new bank licences will be given out by March 31, 2014.
Rajiv Takru, Secretary of Indian financial services, told The BRICS Post: “India will give out new bank licenses by the end of March next year – that is the hope.”
A majority of the 196 domestic banks in India are state controlled.
The Indian finance ministry is keen to have more banks in the country to promote financial inclusion and infuse competition that brings in more efficiency in the financial sector.
Banking is considered to be a increasingly lucrative industry in India.
Indian banks are growing quickly with assets of $1.5 trillion last year and the country is set to increase its share of global banking revenue to three per cent by 2015, a figure that has doubled in just six years according to consultants at McKinsey.
Sumitomo Mitsui Trust Bank is one of the largest banks in Japan, while Nippon Life Insurance is among Asia’s largest financial services company and already has strategic stakes in Reliance Capital’s life insurance and mutual fund units.
With inputs from Agencies