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Twenty-six public and private sector companies have applied for new bank licences in India.
“I don’t think there is a ceiling. I don’t think there is a number in mind. It all depends upon how many applicants are eligible applicants. The fact that somebody applies doesn’t mean he is an eligible applicant,” Chidambaram said in an interview on Tuesday.
Rajiv Takru, Secretary of Indian financial services, has told The BRICS Post: “India will give out new bank licences by the end of March next year – that is the hope.”
Among the top names that are applying for banking licences are Tata Sons, LIC Housing Finance, Aditya Birla Nuvo, Department of Posts, Reliance Capital, L&T Finance and Bajaj Finserv.
“If there are very few eligible applicants, then the number of banks that will get licences will also be few. I don’t think that the governor has any ceiling in mind,” the finance minister said.
Chidambaram has said India needs both large banks and a large number of banks.
“A large number of banks will mean more competition, a quicker reaching into the country and faster financial inclusion. Large banks will mean that we are able to finance large projects using our own bank resources rather than depending upon foreign bank resources. So, both are required in this country,” he said.
India has 26 public sector banks, 22 private sector banks and 56 regional rural banks.
The 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 an 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.
With inputs from Agencies