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B K Modi-promoted Spice Group is perhaps the only big corporate house among the 26 applicants for the banking licence which is not in the lending business. However, that is hardly a factor which could discourage the $ 2 billion group which has the knack to venture into uncharted waters and turn it into a forte.
With financial inclusion being the key theme for this time’s bank licensing process, the group believes it has the bandwidth to be a game changer by cutting transaction costs sharply by using technology.
“The mobile internet traffic has overtaken the desktop interest. So, more people are accessing internet through mobile... Mobile banking is therefore our forte, and a core strength. Mobile banking transactions in India are now surging at 227% year-on-year (in value),” says Preeti Malhotra, executive director, Spice Global who has been entrusted with preparatory work for bank licence.
According to a report by BCG, mobile banking transaction in India is expected to reach $ 350 billion by 2015.
Malhotra says, a transaction over a mobile phone costs just Re 1 to Rs 2 whereas if the person visits a physical branch, it costs the bank Rs 40 to Rs 60.
With all the 3G telecom operators have been mandated to penetrate 50% rural districts in the next two years – this will ensure high quality mobile banking.
Spice Global is already providing mobile banking solutions to rural customers of banks like State Bank of India and Canara Bank through its arm Spice Digital. Spice Labs -- a subsidiary of Spice Digital – is making specialized applications for mobile banking.
“80% people who use smart phone have started using the internet for mobile banking. We expect mobile banking to outgrow internet banking. Even if 25-39% of mobile users have GPRS/3G activated, there would be 250 million to 300 million customers who would access banking services over the mobile. Smart phone and 3G penetration is set to redefine banking,” Malhotra said.
But technology is not the only factor which the group is banking on. It has already started roping in key professionals and says it will ensure that the group maintains arm length with the bank.
To start with, DR Mehta – who is on the board of Smartvalue Ventures as independent director, the company which will promote the bank, will be the Chairman of the bank, if the group gets the licence. Spice has also roped in professionals from foreign, private as well as public sector banks to for the banking foray.
Divya Modi, BK Modi’s daughter, is involved in the financial services segment while Dilip Modi (BK Modi’s son) is overseeing the mobility segment.
“We follow the best Corporate Governance practices in our Group Companies and also have a company listed in Singapore where we have to comply with very stringent corporate governance norms,” Malhotra said adding that consultancy firm E&Y has helped to prepare the business plan which was submitted with the application.
“The Spice group is one of 2G operators whose name has not been dragged in the spectrum scam. We were in the 2G Network business which we exited at the right time. We are among the few 2G telecom operators without any blemish, investigation or criminal case. We have a clean track record,” she said.
On the issue of capital also, the group is comfortably placed because not only the company is debt free but also seeing huge interest from overseas investors, particularly from the NRI community in picking up stake in the bank.
“We have already generated a lot of interest from foreign, NRI and domestic investors and received commitment letters for investment in case we get the license and also proposals, for partnering on different fronts,” Malhotra said adding that the bank will be names as Smart Global Bank.
The group is also exploring opportunities to tie-up with a global bank which will enable them to bring state-of-the –art technology for the banking business.
“The Spice Group has been a harbinger in bringing the best technologies to india and have also brought the best joint venture partners for its businesses like Xerox, Olivetti, Telecom Malaysia, Telstra, Alcatel, etc,” she said.
