With the passing of the Banking Regulation Bill by Lok Sabha and Rajya Sabha, the gates are now open for the Indian business houses and public sector entities to enter into lucrative banking zone.
While the bill would help both private and public sector banks to acquire more foreign investments, it also sanctions wide-ranging powers to RBI to monitor private banks.
The major companies like L&T Finance Holdings, Mahindra Finance, Tatas, Aditya Birla Group, Bajaj Group, Reliance Capital, Religare, Shriram Group, LIC Housing and SREI are the frontrunners to grab this unique opportunity.
As expected, stock prices of most of these companies are on upward trend. But, is it the right time to accumulate these golden shares? The answer is a big ‘NO’, if one is relying solely on the vibrant banking story. It is because there are several hurdles down the lane for the aspirants to tackle. Secondly, only a selected few will emerge victorious among the many.
As is well known, the process of granting new banking licences is in motion after a long gap of 12 years. RBI is expected to come out with final guidelines in the coming months. But, the conditions are likely to be very rigid and hence, only a few will emerge victorious. That apart, many among the contenders may not even find the venture attractive due to limited avenues to generate quick bucks. Above all, the entire process of granting licences might take several months.
As could be made out from the above facts, the clearer picture on the issuance of banking licences will emerge much later. Hence, the time is not yet ripe to bank on banking licences and place the bet on those stocks.
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