The Telegraph
Saturday , February 23 , 2013
Since 1st March, 1999
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Aspirants gear up for action

Mumbai, Feb. 22: Reliance Capital, Mahindra & Mahindra Financial Services, Religare Enterprises, Aditya Birla Nuvo and L&T Finance Holdings are keen to apply for bank licences.

Soon after the RBI released its final norms for the setting up of new banks, senior officials from Reliance Capital, M&M Financial Services, Aditya Birla group and Religare Enterprises indicated their interest.

Anil Ambani had in the past said Reliance Capital was serious about entering banking. At the company’s annual general meeting in 2011, he even pointed out that if successful in getting the RBI’s approval, the banking entity would be called Reliance Bank.

After the RBI issued its final guidelines, Sam Ghosh, CEO of Reliance Capital, said the company would be interested in applying for a licence.

Sunil Godhwani, chairman and managing director of Religare Enterprises, said, “Banking is a logical extension of Religare’s diverse India financial services platform and we will certainly apply for a licence. We are studying the guidelines and will take appropriate steps to apply for it accordingly.”

Sources close to both M&M Financial Services and L&T Finance Holdings said they were likely to put in their applications before the central bank.

Industry observers feel the RBI can receive around 10 applications and issue licences to around five, with the entire process taking at least six months.

“We may see the RBI issuing licences to around four to five players. Some of the NBFCs have a good chance of making it,’’ said an analyst.

The Indian postal department plans to enter the banking business, too. Sources said the department of posts, which has a strong footprint in rural areas, has appointed Ernst and Young as consultant for the proposed “Post Bank”.

Experts feel it will be a challenge for the entrants to meet some of the requirements, such as having 25 per cent branches in unbanked rural areas. “The challenge is not opening a branch in these areas, but whether it can earn business from these centres,’’ the analyst said.

Observers also feel the entry of new players can lead to some consolidation among the existing lenders.

“The move is likely to be positive for old private banks from an acquisition perspective and for those non-banking finance companies (NBFCs) that are into priority sector lending as new players are likely to initially rely on them for meeting targets,’’ Dinesh Thakkar, chairman & managing director of Angel Broking, said.