The Life Insurance Corporation of India's (LIC) board will have to take a decision on its own whether to apply for a banking licence, media reports quoted R Gopalan, secretary, department of financial services, ministry of finance, as saying.
Speaking on the sidelines of a FICCI seminar on microfinance, Gopalan said, "the LIC board will have to decide that first. Let the board decide, discuss and debate whether LIC should get into the banking business or not."
Finance minister Pranab Mukherjee in his Budget speech this year said the government is planning to open up the banking sector, saying that the Reserve Bank of India (RBI) is considering issue of banking licences to private sector players and non-banking financial companies (NBFCs).
This is great news for India's prominent industrial houses, including Tatas, Birlas, Anil Ambani-led Reliance group, the Aditya Birla Group, Tata Capital, Anil Ambani-led Reliance Capital, Malvinder Singh-led Religare group, Muthoot Group, Bajaj Group and Shriram Finance as a change in regulatory environment will boost the ambitions of these entities to enter the banking sector (See: Mukherjee to ease banking licence rules).
Many analysts see this as a pleasant surprise as RBI last issued licences to private banks way back in 2002, to Kotak Mahindra Bank and Rabo Bank.
However, RBI is expected to frame new guidelines for companies willing to apply for a banking licence.