"We do not expect the RBI to issue more than five licences. We believe the probability of a public sector entity obtaining a banking licence is low," Standard Chartered said in a report.
RBI has discouraged groups with high broking or realty revenues from applying, it said.
Bank of America Merrill Lynch is also of the view that RBI may initially give out 4-5 new bank licences even as restrictions on real estate or brokerage business have been removed in the final guidelines.
"We do think the new set of banks (post RBI licences) will find it more difficult to grab market shares in the same manner as the current private banks are aggressive and also employ the best technology," Bank of America Merrill Lynch said.
However, state-owned banks could see a very meaningful fall in market shares over the medium or long term, as they are likely to be more capital constrained, especially, post Basel 3, and at least half of them will also find it hard to compete on service or customer retention, it said.
Another US-based investment banker Goldman Sachs said the pool of eligible applicants may be limited as the RBI will be cautious in giving out new licences.
"In view of the increasing emphasis on stringent prudential norms, transparency, disclosure requirements and modern technology, banks need to have strength and efficiency to work profitably in a highly competitive environment," RBI said in the guidelines for the new bank licence issued last week.
"Banking being a highly leveraged business, licences shall be issued on a very selective basis to those who conform to the above requirements, who have an impeccable track record and who are likely to conform to the best international and domestic standards of customer service and efficiency," it said.
As per the new norms, entities with a minimum track record of 10 years would be eligible for licence after clearance from sector regulators, enforcement, investigative agencies such as I-T Department, CBI and ED.
The minimum paid-up capital for setting up a bank will be Rs 500 crore. The cap on the foreign investment, including FDI/FII and NRI, has been set at 49 per cent.
RBI has set a deadline of July 1 for filing application by interested entities.
As per a report published by Deutsche Bank RBI guidelines for new bank licences allow everyone to apply, including public sector and real estate/broking entities. It has managed to keep conditions tight.