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India bank hopefuls stare down road fraught with cost, risks

Published on Jul 4, 2013 12:39 AM

MUMBAI (REUTERS) - Indian companies looking to set up the country's first new banks in nearly a decade have a long and costly road ahead of them.

While corporate heavyweights from the Tata, Birla and Bajaj groups to Anil Ambani's Reliance Capital Ltd are among those applying for the right to establish full-fledged banks, the pool of 26 hopefuls was smaller than analysts had expected.

Stiff requirements on branch placement and liquidity make for an arduous path to profitability and scale, and have deterred some would-be applicants.

"It will require a considerable amount of marketing expense, branch expansion," said Mr Vijay Mahajan, founder of microlender Basix, which considered applying for a licence but did not.

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