GUIDELINES FOR LICENSING OF NEW BANKS IN PRIVATE SECTOR :

Over the last two decades, the Reserve Bank of India (RBI) gave license to twelve banks in the private sector. This happened in two phases. Ten banks were licensed on the basis of guidelines issued in January 1993. The guidelines were revised in January 2001 based on the experience gained from the functioning of these banks, and fresh applications were invited. The applications received in response to this invitation were vetted by a High Level Advisory Committee constituted by the RBI and two more licences were issued to two entities, viz., Kotak Mahindra Bank and Yes Bank. While preparing these guidelines, the Reserve Bank recognized the need for an explicit policy on banking structure in India keeping in view the recommendations of the Narasimham Committee, Raghuram Rajan Committee and other viewpoints.