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Economy

26 New Bank Applicants Includes Most Big Family Names, Some Unknowns

Twenty six applicants have come forward for setting up banks in India, says the RBI. The exhaustive list:

  1. Aditya Birla Nuvo Ltd., Mumbai.
  2. Bajaj Finserv Ltd., Pune.
  3. Bandhan Financial Services Pvt. Ltd., Kolkata.
  4. Department of Posts, New Delhi.
  5. Edelweiss Financial Services Limited, Mumbai.
  6. IDFC Limited, Mumbai.
  7. IFCI Limited, New Delhi.
  8. Indiabulls Housing Finance Limited, New Delhi.
  9. India Infoline Ltd., Mumbai.
  10. INMACS Management Services Limited, Gurgaon.
  11. Janalakshmi Financial Services Pvt. Ltd., Bangalore.
  12. J M Financial Limited, Mumbai. 
  13. LIC Housing Finance Ltd., Mumbai.
  14. L & T Finance Holdings Limited, Mumbai.
  15. Magma Fincorp Limited, Kolkata.
  16. Muthoot Finance Limited, Kochi.
  17. Reliance Capital Limited, Mumbai.
  18. Religare Enterprises Limited, New Delhi.
  19. Shriram Capital Limited, Chennai.
  20. Smart Global Ventures Pvt. Ltd., Noida.
  21. SREI Infrastructure Finance Limited, Kolkata.
  22. Suryamani Financing Company Limited, Kolkata.
  23. TATA Sons Limited, Mumbai.
  24. Tourism Finance Corporation of India Limited, New Delhi.
  25. UAE Exchange & Financial Services Ltd., Kochi.
  26. Value Industries Limited, Aurangabad.

Old Industrialist Families: The Tatas, Birlas, Reliance, Shriram and Bajaj are represented. Even Religare is one here.

Brokers and Financiers: India Infoline and Edelweiss are largely brokers. JM Financial, IndiaBulls Housing Finance, L&T Finance, Magma, Muthoot, SREI, LIC Housing Finance and others are financiers. 

Institutions: The Department of Posts is one that will be very interesting if it gets the status. And then, there’s IDFC, IFCI and the Tourism Finance Corporation.

Those you haven’t heard of: Value Industries, Suryamani, Bandhan, INMACS and “Smart Global Ventures” are  names that I haven’t really heard of. (Sharp commenter Gaurav points out that Value is actually a Videocon company, so an “industrial family” that joins the list)

Absent are the Mahindras who said they won’t participate, and the microfinance companies. (Astute commenter Rahul notes that Bandhan is a microfinance company)

Will all of them be given licenses? I don’t think so. The unknown names are likely to be delayed for now, while the industrial families may have to wait before institutions. Brokers might never get one, but within the financiers some indeed look like they have the experience with lending and deposits.

It’ll be a long wait before these guys waltz in and take away business from the current lot. I hope whoever is chosen takes a good long look at technology to really improve banking. But the burden of banking for those with already successful lending businesses will be big, with SLR and CRR and priority sector lending and branch restrictions and so on. Will this lead to more rejections or withdrawals? Time will tell.

  • rahul says:

    Bandhan is a micro finance institution based out of Kolkata and operates in the eastern region.

  • lohit says:

    Interesting read on how technology will shake up the still stodgy world of banking –
    “Banking is heading towards its Spotify moment” – http://www.ft.com/intl/cms/s/0/e1ae654a-c791-11e2-9c52-00144feab7de.html (Search for the title in Google if you cant access the article).
    I remember reading that when Airtel,Vodafone and the other telcos wanted to replicate Kenya’s Mpesa model here in India, apparently the bigger banks (SBI, ICICI, etc with all their air-conditioned offices and MBA employee overheads) lobbied against it.
    The post office applying for a license was perhaps not as surprising as the ‘Tourism Finance Corporation of India Limited, New Delhi. ‘ applying for it.

  • Gaurav Somani says:

    Videocon’s Vengugopal Dhoot has applied through Value Industries.

  • Kaushik says:

    Only quote comes to my mind is “The best way to rob a bank is to start a bank.” ..Jeesus do we have scarcity of banks in Indian system? I think not. What we do lag is enforcement of rules and laws when banks do wrong things. Has a single official of PSU banks fired for giving bad loans? Why dont banks declare NPAs properly quarterly on actual facts and subsequently erase the shareholder capital.
    I support competition is fine and definitely TATAs deserve a license. I do have good opinion about TATAs for managing the PF accounts of its group companies employees properly.

  • fubar says:

    After 2G spectrum and Coal blocks, I hope Bank licenses do not become the latest dole to favourites.

  • Sanjeev B says:

    A few more banks will be good for the system. But you’re right that technology is the main issue. Banking services are so overpriced in India, and even more all over the world.
    We need an Account Portability System like the Mobile Number Portability so that we can move account and money quickly between banks without the jumping through the hoops of KYC and account opening. The PAN should be enough KYC.

  • Vivek says:

    What happened to Chidu’s all women bank annunced in budget..don’t they also need to apply?

  • charles amos says:

    only idfc, l&t, lic, department of posts make the intial cut; finserv, tata sons and av birla might make the second cut. Nobody else on this list is remotely reliable with public money to be entrusted to run a bank

  • Anil says:

    “India Infoline and Edelweiss are largely brokers” –
    India infoline derived close to 70% revenue from their NBFC business in 2013-2013..and as per management and their AR..the ratio might touch 75-80% this fiscal..IIFL can no longer be categorised as ‘largely brokers’..that’s my view..