The Reserve Bank of India has issued licences to Dhanalakshmi Bank Ltd and IndusInd Bank Ltd. to open 66 and 30 branches respectively. The later has also received a nod move its corporate office from Andheri to Parel in Central Mumbai.

Amitabh Chaturvedi, managing director and chief executive officer, Dhanalakshmi Bank, said, "We go and meet the regulator every 10 days and apprise it of the bank's progress. The regulator is now comfortable with the new management and their business plan."

The expansion will increase the branch numbers of IndusInd Bank and Dhanalakshmi Bank to 210 and 273 respectively.

Quoting an IndusInd Bank official, "RBI had clubbed the Hinduja Group of companies and the Ashok Leyland Ltd holding under one group and the IndusInd International Holding Ltd (IIHL) under another group. The Hinduja Group of companies and Ashok Leyland were holding around 14%, but this has been brought down to 10% through open market sales."

The official added, "The release of branch licences after two years is a signal that the regulator now has comfort with the promoters and the bank's business plan. We have received RBI approval to set up 30 branches and now we are applying for 140 branches."

These banks were not issued licence considering their deviation from RBI ownership guidelines. The regulator had issued ownership guidelines in 2005, according to which a single entity cannot hold more than 10 percent stake in a bank. It also stated that the net worth of the banks should be more than 300 crores. There are other specific branch licensing norms issued by RBI, under which the commercial banks are required to place branch expansion plan (one-year) before RBI. The norms also require the private banks to set up at least 25 percent branches are in semi-urban and rural areas.

Accordingly, the net worth of Dhanalakshmi Bank has been increased to Rs 401 crore. P. Raja Mohan Rao, the major stakeholder in the group has brought down his stockholding to 9.68% to comply with the regulator's norms.

The so called ‘brick and motor' banking embarks upon the bank branches, which are critical for the bank operations. In India, branches mainly thrive on the retail deposits for building loans assets and other lendings. Contrarily, in developed countries, banks depend largely on the inter-bank markets for asset building.