Top 10 New Banking License Applicants in India

The proposal by the RBI and the Indian finance ministry to accept new banking license applications had shown some hue and cry from firms all over India. But it soon subsided as the new stringent regulations set up by RBI were scrutinized by them. A total of 26 applications were accepted by the RBI before the deadline and many of them were from surprisingly unknown firms like Value Industries, SREI Infrastructure Finance, and Janalakshmi Financial Services etc.

Why there is less number of new Banking License applicants?

• The need to keep 23% statutory liquidity ratio or SLR right from the day 1 of starting the bank.

RBI aims to keep the safety net around it by keeping the banks as close to it by the 23% compulsory government bonds. Another necessity is the regulation to keep a portion of the deposits of the bank with the RBI. This 3% cash reserve ratio or CRR from the day 1 makes another hole in the pockets of the banks.

On the whole, a total of 26% of the total capital will at all times be unavailable for the banks to utilize.

To add to the woes, the new banks will have to take into account the priority sector loans that will be hard to achieve. Of course, the reasons why new banking licenses are incorporated is associated with the need to expand the idea of financial inclusion ( Bank account for every Indian). But forcing the new banking applicants to keep up with these strict regulation right from the day of the starting seems to be primary reason for the lesser number of applications.

Of the 26 new applications received, how many will get the license can never ever be predicted. In 1993 10 licenses were given, in 2003 only 2. So let us look at a list of the top 10 firms that may hold the chance to win the opportunity.

Top 10 new Banking License applicants

1. Aditya Birla Financial Services Private (ABFSPL)

Aditya Birla Financial Service Group

Aditya Birla Financial Services Private (ABFSPL) of Sri Kumaramangalam Birla is one of the top applicants to the open a new bank. With enough experience as an NBFC and with their insurance tie up (Birla Sun Life Insurance), Aditya Birla Financial Services Private holds a good chance to make it big in the Indian banking. Barring the controversy regarding the position of Sri Kumaramangalam Birla on the RBI board as a conflict of interest, Aditya Birla Financial Services Private may cross the line.

2. Bajaj Finance

Bajaj Finserv Lending

Bajaj Finserv easily seems to be the frontrunner for the banking license with a good foothold in the Indian market. While many of the finance firms were unwilling to convert their finance companies to banks fearing the RBI regulations, Bajaj Finance accepted the norms. Backed by a well established finance house, they have the high chances to cross the line.

3. Edelweiss Financial Services (EDEL.NS)

Edelweiss.in

The less talked about Finance company based in Mumbai surprised many by the new banking license application Some time back, Edelweiss Financial Services had joined hand with Tokio Marine to setup an insurance tie up called Edelweiss Tokio which has been creating some interest in the insurance segment. Further a tie up with Catholic Syrian Bank as the Bancassurance partner launched them. . Chairman and CEO Rashesh Shah was clear cut in his plans to make it to the banking sector and as the black horse of the new banking license applicants, Edelweiss Financial Services may cross the line.

4. India Post

Post Office of India

Converting every post office in India, to a bank branch will be a logical step to the financial inclusion. And most importantly, the post offices already have various savings schemes within their limits already to showcase their financial experience. India post really needs this boost to get themselves back to their glory. Perhaps India Post is the perfect banking license applicant who can keep up with the regulations of priority sector lending and financial incision properly.

5. Reliance Capital

reliance

Backed by Sri Anil Dhirubhai Ambani as the chairman, Reliance Capital had forayed into every finance sector to meet up with the demands of the market. Now with the new banking licenses being granted, Reliance Capital will be keeping their heads high to cross the line banking on their credibility and experience.

6. Muthoot Finance

The Muthoot Group

The NBFC that has over-dependence on the gold loans sector has applied for the license too. The success of the Muthoot finance had been fast and no wonder the banking license aspirations had bitten them too.
With Sri M G George Muthoot as the chairman of the NBFC and Kerala s the base, Muthoot Finance might be considered for the license considering their strong foothold in the lending sector.

7. UAE Exchange India

UAE Exchange

B R Shetty is not a celebrated business magnet in India, But he has done wonders by setting up UAE Exchange India, the most prolific money transfer and conversion center. With enough experience in this regard to showcase, UAE Exchange India has good chances to cross the line to win the banking license.

8. India Infoline

IIFL_IndiaInfolineIndia Infoline was initially set up in 1995 as Probity Research and Services Private Limited at Mumbai and has since made continuous strides into the financial sector. The chairman of the company is Sri Nirmal Jain.

9. LIC Housing Finance

LIC Housing FinanceLIC Housing Finance was set up in 1989 as a public limited company promoted by LIC of India. The initial plans of the company were aimed at providing housing loans to organizations, builders and individuals. With the advance of the sector, they had diversified and have now applied for license. With the stable and proved LIC to back them up, the chances are that they may cross the line.

10. L&T Finance Holdings

L&T Finance Holdings

L&T Finance Holdings is being promoted by Larsen & Toubro Limited. Larsen & Toubro Limited acts as the holding company for all the financial business of L&T Finance Holdings in India. Within no span of time from 2008, they have forayed into every sectors of finance and have increased their acceptability among the Indian lenders.
L&T Finance Holdings is a serious contender among the banking license applicants.

The chances are that not many may make the cut as expected. Weeding out the applications and picking up the right ones will be tougher and may take time. If all goes by as expected by December 2013, India will have some newcomers to the banking sector. All the while, the debate as to who will make the cut or who will cross the line will still go on.

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Comments

  1. Vijayashankar Na says

    Only one of the ten mentioned here are in my top list of 4 which consists of Shriram, SREI,Tata sons and L& T Finance

  2. Rohit Kumar says

    UAE EXCHANGE INDIA Having Good Experience to serve customers as it is already into so much banking products, like Money Transfer, Insurance, Loans and share trading so this is too much experience holder, Mr. Shetty having strong leader ship so if i calculate these all then we can say proudly Uae exchange is well deserving company… Best of luck

  3. SAMEER says

    IN MY POINT OF VIEW, MUTHOOT FINANACE IS ONE OF THE BEST. THEY PROVEN 126 YEAR EXP IN FINANCING SECTOR, OPERATING 4300 BRANCHES AL OVER INDIA, HAVING INDIAS LARGETS GOLD LOAN NBFC, HAVING ABOVE 25000 YOUNG QUALIFIED EMPLOYEE STRENGTH WITH DIFF CULTURE, LANGUAE, RELIGIOUS BACKGROUND. CULTIVATING INDIAN CULTURAL AND RELIGIOUS ACTIVITIES THROUGH EACH AND EVERY LOCATIONS. FROM THE INTIAL STAGE TO CURRENT POSITION ITSELF COMPANY HAVE FOLLOWED ALL RBI RULES AND REGULATIONS. MAJOR BRANCHES ARE IN RURAL AREAS ALSO. SO ALL THIS ASPECTS, I AM SURE MUTHOOT FINANACE WILL BE A BANK SOON.

  4. nilin says

    TCPSL is first runnerup for banking license.Have large
    network and experianced team for banking sector. Have already managed more
    ATM by TCPSL and RBI provided approval to install 15000 White leb. ATM to TATA PSL.

  5. Pradeep Bahuguna says

    I feel Tata sons (Tata Investment ) , L&T, LIC Housing Finance, Bajaj Finance, Shriram, PFC, Reliance Capital & India Bulls have stiff competition.

  6. anil R says

    Top 5 which are likely to get the license are:
    1. Aditya Birla Group
    2. India Post
    3. UAE Exchange India
    4. LIC HFL
    5. Bajaj Finance

  7. Diwan singh says

    Looking at the geographical expansion of Muthoot Finance Ltd with 4400 + branches and over 25000 employees including personnel with rich experience from banking sector alongwith brig level military officers for administration and vigilance deparment covered by matured police pesonnel , I believe that Muthoot Finace Ltd itself a symbol of Financial Inclusion and an organisation which has better customer service than banks deserves to a new pvt bank.

  8. srikanth says

    IIFL is one of the most experience with the customers this company attracted to customers with more financial sector ,has to best customer service in India

  9. paul says

    why u said muthoot dont get this license?daily 55000 people came for various business in muthoot branches.muthoot having large profit,branfhes and infrastructure.its a bank ready management.understand

    • sunny mathew says

      If you are thinking muthoot will get Banking license….it will not going to happen ….the leaked news indicate that it is not in the priority shortlist of 15 applicants.Don’t be sad ,we will try for next time.

  10. Raghuveer Aneja says

    Among the private sector applicants, Aditya Birla, India Post, Bajaj & UAE Exchange are the top contenders. UAE Exchange is the real dark horse, considering that they have applied with a fee based model and their desire to establish a bank to channel more NRI funds into India. Their branches are already present in the remote areas in UP & Bihar where most of the remittances flow these days. Players like Muthoot has an over dependency on Gold loans. RBI dont seem very happy with Muthoot inspite of their network.

  11. NARESH says

    FOR UR INFORMATION THAT I THINK NOT PROVIDING BANK LICENSE BY FOREIGN EXCHANGE COMPANY BECOZ THEASE ARE NOT FOLLOW BY KYC GUIDELINES SO I THINK NOT GIVEN LICENCE BY FOREIGN EXCHANGE COMPANY.

  12. vinayarajan p k says

    I hope Uaeexchange will get the banking licence,because it deals with both upper middleand low level customer what RBI aims trough financial inclusion

  13. MITHLESH KUMAR says

    India Post is the best applicant for getting banking licence. Trust of people about it is highly than any other applicants applied for banking licence. It has many branches over all india.

  14. JAGANNATH KANHAR says

    I AGREE L&T FINANCE LARGEST OF WORLD BASED COMPANY AND LAKHS OF EMPLOYES ARE BLESS TO LICENSE L&T AS A BANK.

  15. Arun says

    Uaeexchange is always rocks in all products uin one shop..gold loan, vehicle loan, personal loan, money exchange, swift transfers, ticketing & tours, insurance and etc etc and etc. …This is what the foundation. …..yes uaeexchange will get it easily. ……

  16. Pranav says

    Industrial Finance Corporation of India (IFCI) is one of the strong candidate for BL…hope will succeed soon….!

  17. Anjneya Tripathi says

    I believe that Muthoot Finace Ltd itself a symbol of Financial Inclusion and an organisation which has better customer service than banks deserves to a new pvt bank.

  18. D.RUBAKAR says

    I believe that Muthhot Finance ltd will get the Banking license because it is largest Gold loan company,best Financial service and better customer service in India

  19. RAHUL GUPTA says

    I THINK……… MUTHOOT GROUP WILL GET THE BANKING LICENSE BUT ALL DEPENDS ON RBI DECISION LET SEE WHAT HAPPEN WHO WILL BET WITH ME EITHER ‘MUTHOOT OR INDIA POST ‘

  20. imran says

    muthoot finance is largest gold loan company in india that brand compalsury convering into muthoot bank all the best

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