Barely a week after the Reserve Bank of India released norms for ‘on-tap’ bank licences, non-banking finance companies are gearing up to convert themselves into full-fledged lenders.
The list of hopefuls include UAE Exchange, Manappuram, Muthoot and banking veterans Deutsche Bank co-head Anshu Jain and former Citibank global CEO Vikram Pandit.
This would be the second time that UAE Exchange, a money transfer and payment solutions firm, will be applying. After being rejected in 2013, UAE Exchange changed its business model by expanding beyond remittances and forex services, to small loans.
UAE Exchange chairman BR Shetty has some equity stake in Lord Krishna Bank, details of which are not known. In 2007, the Lord Krishna Bank was merged with the Centurion Bank of Punjab, which was subsequently acquired by HDFC Bank.
UAE Exchange India managing director George Antony said: “We will be applying for the universal bank licence. Since there is no hurry we will plan it and in about 4-6 months make the application.” UAE Exchange had also applied for a small-finance bank licence last year.
“We will definitely be able to leverage our established business, branches and resources. Subject to our board approval, we are certainly keen to apply,” said George Alexander Muthoot, managing director of Muthoot Finance, which has 4,500 branches across India.
Muthoot Finance along with Mannapuram Finance had also applied for universal bank licences in 2013. Mannapuram has a network of over 3,000 branches.
VP Nandakumar, managing director and chief executive officer, said: “We definitely want to look at it (a bank licence). I think our rural presence, large customer base, and ability to garner current and savings account deposits could help us. We are not in a hurry though but our board will be meeting in two weeks and we will discuss the guidelines. The norms will keep away large corporates, and a high capital requirement of ₹5,000 crore would keep away big NBFCs from applying this time.”
Large entities, including Bajaj Finserv and Mahindra & Mahindra Financial Services, are also going to get excluded as they are part of larger conglomerates and hence are not qualified. Nonetheless, they can own a stake of up to 10% in a venture.
Abizer Diwanji, national leader (financial services) at EY India said most entities will plan according to their readiness. “I see this as a phase of consolidation. Since it is not time- bound, I see a lot of NBFCs and financial conglomerates applying, but there won’t be a rush.”
Also, banking veterans, such as Deutsche Bank’s co-chief executive Anshu Jain, who has invested in a SoftBank-backed NBFC venture, former Citibank CEO Vikram Pandit and Jaspal Bindra, former Asia-Pacific chief at Standard Chartered Bank, are also likely to apply.