India Post, IDFC likely to get new bank licences
India
Post and IDFC have emerged as front runners to receive new banking
licences on the back of their strong distribution networks and credible
records.
The
committee led by former Reserve Bank of India governor Bimal Jalan,
which submitted its report to the central bank last week, is of the view
that these two applicants are ready to foray into banking services, a
source who did not wish to be identified said.
The report
contains the names of all eligible applicants wishing to set up banks.
The committee began assessing applications at its first meeting on
November 1.
"While the
report is yet to be looked into, there is a high chance of giving
licences to India Post and IDFC due to their large existing network,"
the source said, without divulging details.
The central
bank will hold a meeting with finance minister P Chidambaram in the next
10 days to discuss the issue. The final names are likely to be
announced by month-end.
India Post,
being a government body, technically needs Cabinet approval to set up a
bank. The interim budget unveiled by finance minister P Chidambaram
recently did not earmark any funds for the postal department or mention
the proposal in the budget. However, in case its name gets cleared, the
formal proposal can be sent to the Cabinet for approval at a later stage
or to a new government taking office afterelections expected in April-May.
A full budget
expected to be presented by the new government in July-August is likely
to contain a detailed provision to help India Post set up a bank.
India Post has a
nationwide network of 155,000 post offices and already has experience
in administering a savings bank scheme, selling tax-saving instruments
and accepting PPF deposits.
IDFC has been
involved in infrastructure funding, asset management (mutual fund) and
private equity services, which are closely linked to banking.
"I am trying
that Post Office should get a banking licence to serve the common man in
rural areas. I will keep by struggle on for banking licence,"
communications minister Kapil Sibal had said recently.
The RBI
received as many as 27 applications but Tata Sons Ltd and Videocon
Group's Value Industries Ltd later withdrew themselves from the race.
Besides India
Post and IDFC, IFCI, Anil Ambani's Reliance Group, Aditya Birla Group,
L&T Finance Holdings and Muthoot Finance, are also in the race to
set up new banks.
