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Banking aspirant UAE Exchange & Financial Services Ltd, a non-banking finance company (NBFC), will dilute its promoter holding by bringing in investors to comply with the eligibility rule.
At present, promoter holding is about 63 per cent. The maximum holding allowed under the Reserve Bank of Indias (RBI) norm for a new bank licence is 49 per cent.
A top company official said the plan is to expand the capital base through private placement of equity to prospective investors. There are also rules on foreign holding.
The capital expansion would help to facilitate compliance with both norms. Ernst and Young has been hired to look for new investors. He, however, did not elaborate on a timeline for the exercise.
The entire business planning and regulatory interface (for the banking foray) is being managed by an internal team of 18 people.
UAE Exchange has been set up by B R Shetty and Abdulla Humaid Al Mazroei, promoters of the UAE-based NMC group.
Its key business areas are money changing, money transfer, gold loans, travel and ticketing activity.
The company is one of 26 entities to have applied for a banking licence. Among the others are India Post, Tata Capital, Reliance Capital, Aditya Birla Nuvo, LIC Housing Finance and L&T Finance.
Y Sudhir Kumar Shetty, chief operating officer for global operations for UAE Exchange, said most of the branches of the NBFC were in far-flung areas. With RBI focusing on financial inclusion and banking correspondents, UAE Exchange was one of the most eligible, since it has been already servicing last mile customers, he added.
Given the reach and 33 years of experience that UAE Exchange has among non-resident Indians across the world, the company would be able to channelise the savings of these people if given a banking licence, the executive said.
