RBI guidelines on new banking licences by July end

The Reserve Bank of India said on Tuesday it will come out with a discussion paper on new norms for granting banking licences to private sector companies and non-banking financial companies by July end.

The discussion on new banking licences will be posted on the website of the central bank for public comments, RBI governor D Subbarao said while unveiling the monetary policy for 2010-11.

"Thereafter, detailed discussions will be held with all stakeholders on the discussion paper and guidelines will be finalised based on the feedback," he said.

All applications received in this regard would be referred to an external expert group for examination and recommendations to the RBI for granting licenses, he added.

Separately in Parliament on Tuesday, Minister of State for Finance Namo Narain Meena said although Expressions of Interest of some private entities have been received by RBI, they are to be processed once the guidelines for issuing fresh banking licences to private players are finalised.

The move follows the announcement made by Finance Minister Pranab Mukherjee in the Budget speech 2010-11 to give more banking licences.

"The Indian banking system has emerged unscathed from the crisis. We need to ensure that the banking system grows in size and sophistication to meet the needs of a modern economy.

"Besides, there is a need to extend the geographic coverage of banks and improve access to banking services," Mukherjee had said.

The RBI was considering giving some additional banking licences to private sector players.

Non-banking financial companies could also be considered, if they meet the RBI's eligibility criteria, he had said.