The groups interested in seeking a banking licence also include Religare, L&T, Srei Infrastructure and Shriram Capital, along with some public sector entities like PFC, REC and LIC Housing Finance.

While experts believe that clarity was required on the various proposals made by the Reserve Bank of India (RBI) in its draft guidelines, the interested parties have already started working on their readiness and adherence to the terms and conditions put forth by the central bank.

At the same time, almost all the interested parties will be  writing to the RBI, suggesting changes relevant to their candidature, in response to the central bank’s invitation for public comments on the draft guidelines till next month, a senior official at one such group said.

However, the final guidelines and the eventual award of banking licences were unlikely to come up at least till next year, as certain amendments were required to be ratified in the extant banking regulations by Parliament.
Many of these groups already claim to meet the guidelines proposed by the RBI, but there are still many areas that require further clarity, an official at another such group said.

Many of the interested companies have either already set up advisory panels for their possible banking foray, some are seeking outside support from third-party consultancy and advisory firms and some others are in the process of doing so.
Experts said the draft guidelines need clarity on some clauses, like how the RBI would define diversified ownership and corporate groups and about the chances of public sector companies to bag licences.

“The draft guidelines need clarity on some points like the listing aspect and its definition of corporate groups and public sector companies,” consultancy firm Corporate Professionals’ Managing Director, Pavan Kumar Vijay, said.

At the same time, investment banking major Morgan Stanley said the RBI guidelines were positive for non-banking financial companies (NBFCs) and housing finance companies and entities like Shriram Transport, LICHF and Reliance Capital could potentially look to convert themselves into banks.

Those who have been vocal about their banking ambitions include Anil Dhirubhai Ambani Group firm Reliance Capital, Religare, Bajaj Finserv, L&T Finance, Srei Infra and M&M Financial Services, while entities like Tata Capital and the Aditya Birla Group are also said to be keen on getting a licence.  Brokerage firm Unicon Wealth Management said companieslike Shriram Transport, M&M Financial, Bajaj Finserve, Magma, IFCI and L&T Finance were in a better position to capitalise on this new opportunity to expand their existing businesses.

On the other hand, Emkay Global Financial Services said the draft guidelines were positive for PFC, REC, LICHF and Srei, among others, but many of them might require corporate restructuring.   
Don’t allow business houses to run banks, says CPI(M)

The CPI-M on Sunday opposed Government’s decision to allow corporates to set up banks, saying it was a “completely irrational and retrograde” move that would cause “incalculable damage” to national economy.
The move not only completely reversed Indira Gandhi’s bank nationalisation policy of 1969 but was also “fraught with serious consequences as it would push the banking sector towards a crisis and financial scams,” party General Secretary Prakash Karat said here.

Maintaining that CPI(M) strongly opposed these moves, he said it would ask all political parties, trade unions and mass organisations to oppose the Government’s decision that would cause “incalculable, harmful consequences” for the economy.