Stock in IDFC gained as much as 8.6 per cent in morning session trade on Thursday after the Mumbai-based company became one of the two entities to get a banking licence from the Reserve Bank of India (RBI).

The central bank granted a banking licence to IDFC for an initial period of 18 months, during which the company will have to meet all requirements laid down by the apex bank.

Kolkata-based microfinance company Bandhan Financial is another of the two entities to win a licence to create a network of bank branches across the country.

The RBI said that judged a total of 25 applicants under criteria including analysis of their financial statements, their track records, and their potential to operate a bank. The apex bank also admitted that it its approach in initial round of bank licenses could be seen as conservative.

The central bank said in a statement, "RBI's approach in this round of bank licenses could well be categorized as conservative. At a time when there is public concern about governance . this may well be the most appropriate stance."

IDFC shares gained nearly 16 per cent and 41 per cent over the previous week and month, respectively, as against a 1.7 per cent and 6.5 per cent jump in the broader Sensex.

Shares of other contenders like LIC Housing Finance and L&T Financial suffered steep declines after they failed to gain the licenses.