Govt hopes bank licences will be given by Mar 2014: Takru

The government hopes that the new banking licenses will be awarded by March 31, 2014, financial services secretary Rajiv Takru today told CNBC-TV18. Today was the last day for corporates to apply for banking license.

Stressing that quality of the applicants is a must; Takru said there was no bias to any one company.

"Before we know how many of them are actually going to get licenses we would need to see the quality of their applications. Let me clarify that whether somebody gets a licence or does not get a licence is no reflection on the company or on the applicant. It is just that as part of diligence there may be something which may be noticed which would not qualify that person for the grant of a license," Takru said.

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Around 19 companies are eyeing banking licenses with L&T Finance Holdings being a top contender. Many other companies like Muthoot Finance and Shriram Capital applied for the bank license at the last moment.

Takru further added, now that all the applications were in, there will be detailed securitisation of each application. "When it takes place I am reasonably sure that we will end up with some good parties. Let me assure you there is no bias in the system at all in favour of anybody - large, small whatever," Takru assured.

Below is the edited transcript of his interview with CNBC-TV18:

Q: What is your view on the applications for bank licences?

A: Before we know how many applicants are actually going to get licenses, we would need to see the quality of their applications. Let me clarify that whether somebody gets a licence or does not get a licence is no reflection on the company or on the applicant.

It is just that as part of diligence. There may be something which could be noticed which would not qualify that person for the grant of a licence.

Q: Active consideration of exposure to real estate and stock broking was removed from the eligibility criteria. That has raised huge concerns from economists across the world, from different experts. Do you in fact see companies with an exposure to these sectors getting a banking licence?

A: I have maintained that whatever applications come will be examined as per due process by the internal committee, the external committee and ultimately by the approving authority inside the Reserve Bank of India (RBI), which is a fairly detailed and tedious kind of a process.

They will look at applications from all points of view. In any case, I don’t think there is going to be any risk taken during the diligence.

Q: Some of these applicants have been in the news for investigations, not just by domestic investigative agencies, but also for violation of regulations abroad. Do you think they should give up hope right away because they will not match the fit and proper criteria given that they have pending investigations?

A: In any country where there is a rule of law, the mere pendency of an investigation is not sufficient to pass judgement on anybody. We need to be very clear about that.

You can start investigation against anybody, but that does not necessarily make that person a criminal. RBI will examine the nature of charges, the evidence etc, and then make an informed choice.

Q: By when do you think we will actually see banking licenses being given out?

A: We hope at the earliest and with a bit of luck maybe by the end of this financial year, that is March 31 2014. It may be a month here or there, but thereabouts.

Q: By the end of the financial year, we are going to see a new RBI governor. So, when is that process going to begin?

A: The term of the governor ends in September. So, whatever is to be done will be done before that.