With the Reserve Bank of India (RBI) coming out with guidelines for new banking licences, quite a few corporate and business houses are expected to join the fray. While dozens would be vying for a licence, only half a dozen are expected to win them.
A few aspirants from Bangalore will be trying to fend off competition from corporate heavyweights such as the Aditya Birla Group, L&T, and Mahindra & Mahindra that have indicated their interest in starting a bank. Among the others are Chennai-based Shriram Group, SKS Microfinance and the Murugappa Group.
The Manipal group is one of those from Bangalore expected to make a bid for a licence. The group has had the experience of running a bank till 1969 when they were nationalised. But, it is still deliberating on it. "We are internally discussing the possibility of applying for banking licences. We are meeting people. Mohandas Pai (former finance and HR head at Infosys) and me are looking to form a consortium along with a few more people," Dr Ranjan Pai, CEO, Manipal Education and Medical Group, told Business Standard.
Pai said it was a large responsibility and they were giving a deep thought to it. "With education and healthcare on our plates, it's quite a bit we are doing already. We are not sure if we have the bandwidth as of now. We will take a call on this in another month to 45 days," Pai added.
Ramesh Ramanathan, who founded and promoted Janalakshmi Financial Services, a financial institution servicing the microfinance needs of the urban poor with a market-oriented focus, is another contender from Bangalore expected to throw his hat into the ring. Ramanathan was MD and Europe head of the corporate derivatives at Citibank in London and the opportunity to start a bank would supplement his ventures in affordable housing and microfinance. Ramanathan had returned to India in 1998.
He believes that with the RBI making financial inclusion the core of the guidelines, it would only help him in his bid. "Though there are many large players vying for the licences, RBI has provided a level-playing field with the norms that it has set this time," said Ramanathan, an alumnus of BITS-Pilani and Yale University.
Meanwhile, Janalakshmi has received around Rs 200 crore in risk capital investments and it expects to raise additional money in the next few months to meet the capital adequacy norms of Rs 500 crore for a banking licence. It expects to be comfortable in meeting the norms with its existing business plans.
It was in 2001 that the RBI had last issued banking licences. While then the objective of the RBI was aimed at increasing the financial depth of the banking sector, this time they are aimed at financial inclusion.
The RBI has said a new bank must have at least 25 per cent of its branches in unbanked rural centres such as villages with population of less than 10,000. Also, this round of licensing has the higher usage of technology as an important criterion.
