NBFCs rally as Rajan reiterates RBI's plan on new bank licences in Jan 2014

NEW DELHI: NBFC stocks such as Bajaj Finance, JM Financial, LIC Housing Finance, L&T Finance Holdings, IDFC, India Infoline, etc, rallied as new RBI governor Raghuram Rajan reiterated that new bank licences will most likely be announced around January 2014.

The governor also emphasised at a push for more international settlements in rupees and further liberalisation of financial markets.

New banking licences would be issued by the end of January 2014, while the central bank is also contemplating 'on-tap' issuance of licences, Rajan said.

The RBI is undertaking the initial processing now and will refer the shortlisted applicants to the independent committee soon.

The target is to complete this process around mid-January, when Deputy Governor Anand Sinha, in charge of this process, retires. The proposal for on-tap licenses is also being considered.

At noon; Bajaj Finance was trading 4.4 per cent higher at Rs 1022.60, while IDFC was up 7.2 per cent to Rs 85.80. JM Financial was trading 6.6 per cent higher at Rs 22.40.

India Infoline, L&T Finance Holdings, Muthoot Finance and IFCI were trading higher in the range of 2-4 per cent.

The central bank has received 26 applications from those seeking to set up new banks. "We will not stop with these licences. The RBI has put an excellent document on its website exploring the possibility of differentiated licences for small banks and wholesale banks, the possibility of continuous or on-tap licensing, and the possibility of converting large urban co-operative banks into commercial banks," said Rajan.