This Article is From Feb 24, 2013

Over dozen corporates, PSUs queue up for banking licences

Over dozen corporates, PSUs queue up for banking licences

More than a dozen corporates, including big names such as Aditya Birla Group, M&M, L&T, as well as state-owned PFC, LIC and India Post, will apply to the Reserve Bank for licence to open banks.

While announcing comprehensive guidelines for new bank licences two days ago, the RBI said interested entities can file their applications by July 1.

Other entities keen to enter the banking space are IFCI, Shriram Group, Religare, ADA Group, Srei Infra, India Infoline Ltd and IndiaBulls Ltd. Reliance Industries Ltd and Tata Group, which are speculated to be mulling entry into the banking space, have remained tight-lipped about their plans.

Power Finance Corporation (PFC) Chairman and Managing Director Satnam Singh has said the company would seek approval for entering into banking space in the next board meeting. "We qualify in both the categories...either we can set up a bank or convert ourselves into a bank," he said.

Larsen & Toubro spokesperson said the group would be interested in applying for new bank licence.
Commenting on the norms, non-banking financial entity Shriram Capital Chairman Arun Duggal said RBI has come up with comprehensive guidelines.

"We remain interested in foraying into the banking space and promoting financial inclusion," Duggal said, adding that the Group has required capital to enter in the banking sector.

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.

An official in the Finance Ministry, which controls majority stake in term lender IFCI, said the entity would also like to be considered for new bank licence.

IFCI lost out on bagging licence in 1993 when two other term lender ICICI and IDBI were permitted to open banks.

The company will discuss about foraying into the banking sector in the board meeting, IFCI CEO and Managing Director Atul K Rai said.

Aditya Birla Group CEO Ajay Srinivasan Chief Executive of Aditya Birla Group's Financial Services said: "Our group remains committed to meeting financial needs of its target customers. We intend to apply for a banking licence."

CEO of Reliance Capital Sam Ghosh said: "We will be interested in applying for a banking licence."

When asked whether IndiaBulls will apply for a banking licence, its Group Director Ajit Mittal said: "We have an open mind. We will take a view. The Board will decide in due course of time."