Big Business in Banking?

In a significant development in issuing new banking licenses, the Reserve Bank of India has allowed all private and public sector companies to apply for the banking licenses, as promised in the Union Budget 2010-11.

The last date to apply for get the bank licenses is July 1, 2013. Now the companies those can afford Rs 500 crore for the minimum paid-up capital for setting up a bank can apply for banking licence.

This is a give move by the RBI to strengthen the banking system in India. With the entry of big business houses into the banking system would not only boost the banking system, but also help proved a milestone.

Last time the RBI had issued banking licence to Yes Bank in 2004.

The big business houses like Tata, Mahindra and Mahindra, Aditya Birla Group, L&T, ADAG and Reliance could apply for the banking licence in India.

There will be more private banks in India, once the licences have been issued to the companies, like given to Yes Bank in 2004.

There 26 public sector banks and 22 private sector banks in India. Soon the number private sector banks would go up, after the licencing process is completed.

However, there are some strict guidelines in the new banking lincences system, which need to be followed by the companies those would apply for it.