Cos laud new bank licence norms

Written by fe Bureau | Mumbai | Updated: Feb 23 2013, 08:02am hrs
Prospective bank entrants believe the Reserve Bank of India (RBI) guidelines on new banking licences are positive and will ensure that only serious long-term players are in the hunt for a bank licence.

Bharat Doshi, the chairman of Mahindra & Mahindra Financial Services, said that the minimum paid equity capital requirement of R500 crore along with the need for a sound 10-year financial track record ensures that non-serious players are weeded out.

Sunil Godhwani, the chairman and managing director of Religare Enterprises, said at first glance, it seems positive, adding that the clause to allow new banks to list in three years instead of earlier requirement of two years is a welcome sign. Financial service companies are largely independent, especially banks should not be governed by any promoter group. So the decision to cut promoter holding to 15% is a positive sign as well, he added.

Ajay Srinivasan,CEO, financial services Aditya Birla Group, said, We welcome the new banking guidelines. This is a key milestone that promises to not only provide an impetus to the Indian financial services industy, but also usher a new era of financial inclusion in the country. The Aditya BirlaGroup remains committed to meeting all the financial needs of its targetcustomer. And towards this strategy, banking will play a key role. We intendto apply for a banking licence.

Industry experts also welcomed the move to permit players across the board including private and public sector entities as well as Non-Banking Financial Companies (NBFCs). Its a good thing that now brokers and realty players have been allowed. Why exclude anyone The regulator anyway does so much ring fencing around banks, it does not matter who the promoter is. It takes a lot of time before a player becomes big enough to become competition, so its not a major concern, said Keki Mistry, VC & CEO, HDFC.

Umesh Revankar, managing director of Shriram Transport, said Shriram Group's intention is to float a new bank. We have built NBFCs over the years which are doing quite well, so there is no point in converting them to banks." Incumbent players expect competition will increase with new entrants coming in. It will help to ramp up services and efficiency of existing players. The ultimate beneficiary of this would be the customer, said KR Kamath, CMD, Punjab National Bank.

Shinjini Kumar, director PwC India, said the field is more open now and we can expect many more applicants for bank licences as they are open to public sector entities as well. However, not all eligible candidates have made up their minds on setting up a bank. We are eligible for a bank licence and one of the most suitable candidates as well. But whether or not to go for it is something that will be decided after the board meeting, said Ajit Mittal, group director Indiabulls.