The RBI received 27 applications and subsequently, Tata Sons Ltd and Value Industries Limited BSE 1.56 percent withdrew.

Public sector units, India Post and IFCI BSE 3.92 percent and private players such as Anil Ambani group and Aditya Birla group were among 25 players in the fray for bank licences. Bajaj Finance BSE 3.42 percent, Muthoot Finance BSE -0.51 percent, Religare Enterprises BSE 0.05 percent and Shriram Capital have also applied.

Asked about consolidation in the banking sector, Chidambaram said: "I am advocate of consolidation but I have said that the initiative must come from the banks themselves, which means banks have to take their stakeholders into confidence. It has to come from banks."

On capital infusion in PSU banks, the Finance Minister said the government will provide more funds if it mobilises higher resources.

"As you know, government has provided 11,200 crore for next year. This is not adequate, but that's the budget estimate... As we find more money, we should infuse more into the public sector banks," he said.

The Finance Minister said the meeting also deliberated on ways to raise equity capital of public sector banks to support their growth.

"We have discussed ways to raise additional Tier I capital. Hopefully, we can take them forward. I will discuss some ideas when I meet with RBI board day after tomorrow," he said.

Chidambaram will address the RBI board on March 7.

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