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India’s aspiring banking moguls fail to impress

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By Andy Mukherjee

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

The list of India’s aspiring banking moguls is less impressive than it is long. The central bank said on July 1 that it had received 26 applications for new banking licenses.

Nobody knows how many permits it will eventually issue - the last time India allowed new lenders in 2003, only two out of more than 100 applicants made the final cut; in 1993, 10 new banks were born.

The scarcity value of the licences has attracted a motley crew of hopefuls, ranging from India’s humble postal department to Mumbai billionaires Anil Ambani and Kumar Mangalam Birla, to this once-a-decade lottery. The Tata Group, too, has thrown its hat into the ring. But the most enthusiastic interest has been shown by local, non-bank finance companies, especially those that specialize in high-risk, high-margin loans.

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