After RBI nod, scramble for banking licences begins
On Friday, the central bank announced its final set of guidelines for new banking licence applications, where it allowed all private and public companies to apply. While the new banks need only R500 crore as initial equity capital, applicants need to be financially sound with a successful track record of running their business for at least 10 years.
For instance, L&T Finance Holdings has been in acquisition mode since 2012, having acquired a mutual fund company, a housing finance firm and an auto finance company to turn itself into a well-diversified NBFC, paving its way to becoming a bank. The company is also reportedly in talks to buy Morgan Stanley’s wealth management business.
“With deposits and other banking services, we shall get to interact with all customers on all grounds; it increases brand recall and increases business opportunities. It diversifies our sources of funds as well,” said N Sivaraman, president and wholetime director, L&T Finance Holdings.
NBFCs have the option to convert themselves into a bank if all the activities undertaken by it are allowed to be undertaken by a bank departmentally. In such a case, the