Banking regulator, Reserve Bank of India has set up an expert committee to study the issue of granting bank license to new Urban Cooperative Banks (UCBs).

The committee has been formed under the leadership of financial sector expert Y H Malegam. It would review the policy on setting new UCBs and decide on new norms in this regard.

"It was announced in the Annual Policy Statement 2010-11 to set up a committee comprising all stakeholders for studying the advisability of granting new urban co-operative banking licences under Section 22 of the Banking Regulation Act, 1949," the RBI said in a statement.

The other members of the high level expert group include National Bank of Agriculture and Rural Development (Nabard) Chairman U C Sarangi, Principal Secretary Co-operation (Maharashtra) S K Goel, National Federation of Co-operative Urban Banks President H K Patil and Indira Gandhi National Open University Director K Elumalai.

"The Reserve Bank is considering providing licences to a limited number of new banks. A larger number of banks would foster greater competition, and thereby reduce costs and improve the quality of service," the central bank said.