The committee led by former Reserve Bank of India (RBI) Governor Dr Jalan held its third and final meeting before submitting its recommendations to the central bank. The panel had first met on November 1.
"We have submitted report (on new bank licences) to RBI," Dr Jalan said after a four-hour meeting.
The licences are likely to be awarded my March-end and the election code of condust will not affect the process, banking Secretary Rajiv Takru said.
Non-banking financial companies (NBFCs), which already own an existing network of financial services in the country, are likely to get priority, the RBI had indicated.
Analysts said IDFC and LIC Housing Finance were among the favourite to win licences as of now.
IDFC was among the top gainers on the Nifty; closing 1.5 per cent higher at 95.65. LIC Housing Finance ended 3.21 per cent higher atRs. 209.20.
Anil Ambani's Reliance Group, Aditya Birla Group and Bajaj Finance are some of the prominent names in the race. Muthoot Finance, Religare Enterprises, L&T Finance Holdings, India Bulls Housing Finance Ltd. are among the other companies who have applied for licences.
IFCI and India Post are the applicants from the public sector.
Of the companies that had initially shown interest in entering the banking sector, Tata Sons, the holding company of the Tata group, withdrew its application in November 2013, leaving 25 players in the fray.
The Tatas were however not the first to pull out, Mahindra & Mahindra Financial Services also decided not to apply for a banking licence in June last year. In September, Value Industries Ltd, a unit of Videocon Industries Ltd also decided to withdraw its application.
The RBI requires new banks to open one in four branches in rural areas and fulfil statutory reserve requirements, including placing 4 per cent of deposits with the central bank and holding 23 per cent in government bonds from Day 1. They will have to allocate 40 per cent of advances for priority-sector lending after three years.
Kotak Mahindra Bank and Yes Bank were the last two entities to get banking licences from RBI in 2003-04.