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Tatas get bank entry via DCB

Mumbai, July 10: The Tatas are picking up a 4.6 per cent stake in Development Credit Bank (DCB), kindling speculation that the $22-billion group may be keen to establish a presence in the banking industry.

Some time ago, the Tatas had picked up a 7 per cent stake in low-cost carrier SpiceJet and sparked a buzz that it might be re-entering the aviation industry which it had pioneered with the creation of Tata Airlines in 1938. Tata Airlines was the precursor to Air- India.

Tata Capital, a subsidiary of Tata Sons, will be picking up the stake in DCB at an investment of about Rs 85 crore. The Tatas are among a group of five investors who will collectively invest around Rs 310 crore in the private sector bank. They will be picking up this stake through a preferential issue.

The other investors include Al Bateen Investment Co LLC of the UAE and Mauritius-based entities — GRA Finance Corporation Ltd, DCB Investments Ltd and India Capital Opportunities Ltd.

Gautam Vir, managing director and CEO of DCB, told The Telegraph that funds raised from the preferential allotment would be used to improve the bank’s balancesheet. “Their (the Tatas) investment is in the range of Rs 80 to 85 crore,” he added. DCB is now focusing on small and medium enterprises (SMEs) and the retail sector as the key areas of growth. The Tata group officials could not be contacted for their comments on the development.

The move comes just days after Kishore Chaukar, director of Tata Sons and managing director of Tata Industries Ltd, told reporters in Chennai that the group had no plans to enter either aviation or banking.

Observers tracking the group believe that the development could just be a beginning of the conglomerate’s interest in banking.

Before several banks were nationalised in 1969, the Tatas were reported to be actively involved with the Central Bank of India. Sir Sorabji Pochkhanawala founded the bank in 1911 and Sir Pherozesha Mehta was the first chairman of what has been termed the first swadeshi bank.

The Tatas have been interested in expanding their presence in the area of financial services and formed Tata Capital only recently.

The new company will offer services in retail finance, housing finance, capital market, merchant banking, private equity, and vehicle finance.

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