Mahindra and Mahindra group has set its eyes on the banking sector. The group may foray into banking through its deposit taking non-banking financial company (NBFC), arm Mahindra Finance. Speaking to FE, Ramesh Iyer, managing director at Mahindra Finance said they are quite excited about the matter and are awaiting guidelines from the Reserve Bank of India (RBI).?We are very excited about the announcement. We are not saying a ?no? to go-ahead for the banking license,? said Iyer.

During the Union Budget 2010-11, finance minister, Pranab Mukherjee had said fresh banking licenses should be issued to private players and NBFCs. The RBI is still working on the guidelines, which are expected in another two-three months? time. Iyer said Mahindra Finance, plans to go big on rural housing in the next five years. ?We are very excited about the housing business. In the next five years, we aim to grow the housing portfolio as big as our company itself,? said Iyer.

The company disburses these housing loans in the semi-urban and rural areas basically for house renovations and self owned properties. The average ticket size of such loans could be up to Rs 3-4 lakh. Last year, the NBFC did business close to Rs 100 crore in its housing portfolio.

Talking about liquidity, Iyer said this is not an issue. The company is able to get funds from banks for 1-3 years at an average rate of 8-8.5%.

?There is no dearth of liquidity for us. We have been able to raise funds with the help of banks, mutual funds, pension funds, provident funds, securitisation, commercial papers and fixed deposits,? said Iyer adding that the short term rates have moved up and there is a likelihood that the long term money will also get expensive.

The NBFC is offering public deposits at 8.5-9% between 1-3 years. Iyer said that currently they have a deposit base close to Rs 500 crore in selected centres.

During the year, Mahindra Finance is planning to hire 800-1,000 employees. The current staff strength stands at 6,000.

At the same time, the company plans to add 25-30 branches this year.