In the end, it was just blather. Financial institutions, which till some time back were straining at the leash to enter universal banking, seem to have suddenly contracted cold feet.
For, at deadline on October 31 for filing of applications for their conversion into universal banks only "one-and-a-half" mustered the courage to go for it: a detailed application from ICICI, and a "half-plea" by the Industrial Development Bank of India (IDBI).
Half-plea, because IDBI's application does not contain any details. At best, it shows the institution's "expression of interest" to become a bank. How and when? Don't know. Don't ask. Perhaps IDBI itself does not know.
And the New Delhi-based IFCI, which, too, has made some noise on this score, hasn't filed an application. It has not sent any feelers to the RBI either.
Another "serious contender", Exim Bank, is also absent. The RBI has just a fortnight's time to decide on the applications as the finance ministry wants to hear from the central bank by November 15.
The lack of interest by the institutions has made the job easy for the RBI as it will be required to take a decision only on one application (that of ICICI).
ICICI had filed its application on universal banking on October 25, complete it every details. It wants to become a bank by merging ICICI with ICICI Bank. IDBI, on the other hand, filed only an "in-principle" application on October 31 without spelling out any gameplan.
The new ICICI Bank is likely to be born on March 31, 2002, provided it gets the apex bank nod. ICICI has for quite sometime been working as a virtual universal bank with mutual fund, merchant banking arm, insurance arms-- both life and non-life-- broking firms etc under one roof.
IDBI is still in search of a strategy. It is looking at different options for becoming a universal bank. The financial institution is working along with Boston Consulting Group for a blueprint on the merger and handhold the institution on the universal banking path.
Though IDBI chairman and managing director P P Vora initially said that IDBI Bank would remain separate and will not be merged, market observers feel that this may not be possible any longer.
Observers point out that once IDBI becomes a bank, it cannot hold substantial stake in another bank (read IDBI Bank) and hence it will be left with no choice but to merge the bank with it.
Even though it is keen on picking up a public sector bank, there may not be any bank willing to fall into its lap. Though there have been rumours that the FI will decide on a takeover target within the next six weeks there is no concrete move from the institution.
Also, the IDBI Act will have to be repealed. It will be a long drawn out affair as that will need the nod of Parliament.
"IFCI has been saying that it would pick up bank before going in for universal banking. However this seems doubtful going by the present financial position of IFCI," said one banker.
Exim Banking had initially said that it would get into commercial banking. However, after the new managing director T C Venkat Subramanian took over, this plan was put on the backburner.
