Bajaj Group targets banking space

Written by Geeta Nair | Pune | Updated: Jul 23 2010, 03:47am hrs
The Bajaj Group is eyeing to foray into banking, but the idea could take its own time to get implemented as the regulator is not keen to issue new banking licences to large industrial houses. However, Rahul Bajaj, chairman of Bajaj Finserv and Bajaj Auto Finance, is optimistic about entering into the banking space.

The companys entry will depend on the guidelines laid down by the Reserve Bank of India. RBI is slated to release draft guidelines on the issue of new banking licenses to corporates

The Delhi government was open to give banking licences to private corporate groups and NBFCs and was in favour of reconsidering the norms. However, the RBI is not keen on allowing industrial houses into banking.

The groups foray into banking was of great interest to shareholders of Bajaj Auto Finance and Bajaj Finserv at their respective AGMs. We are in principle interested in getting into banking, Bajaj told shareholders of Bajaj Finserv and Bajaj Auto Finance.

According to Bajaj,denying industrial houses could not be justified and instead, there were more reasons to allow them into banking because they had the track record, financial standing and the networth needed and the RBI could put restrictions on loans and investments to the group companies as safeguards. Give it to the good guys and not those who will run away with the depositors money, he suggested. We cant go back to the old policies in this age and time, he said.

Bajaj acknowledged that RBI steered the economy well in difficult times, managed interest rates and liquidity well but he did not agree with them on the issue of not allowing large industrial houses into banking.

Depending on the eligibility criteria, Bajaj Finserv or its subsidiary, Bajaj Finance, could be used to get into banking. We intend to do it as a new company. It will need capital of Rs 500 to Rs 1,000 crore and BFL will not be able to do it, so it could be Bajaj Finserv, he said.