FM resurrects banking foray dream of Ambani, Birla, others

New Delhi, Feb 26 (PTI) Industrial houses like Tatas,
Birlas and Anil Ambani-led Reliance group Friday got a shot in
the arm as Indina Finance Minister Pranab Mukherjee made it
easier for private sector entities' to enter the banking
sector.
"This move will potentially open exciting new avenues of
growth for Reliance Capital in the future. We await further
details and guidelines," Reliance Capital CEO Sam Ghosh said
on Mukherjee's proposal on banking licences to private
entities and non-banking financial companies.
Delivering his Budget speech in the Parliament, Mukherjee
announced that Reserve Bank of India was considering to give
banking licences to some private sector players and
Non-Banking Financial Companies could also be considered for
the same.
Besides Reliance Anil Dhirubhai Ambani Group, many other
private sector groups and NBFCs, such as Aditya Birla Group,
Tata group arm Tata Capital, Malvinder Singh-led Religare
group and Muthoot Group, have been eyeing a banking licence
and many such entities welcomed today's announcement.
Aditya Birla Group Chairman Kumar Mangalam Birla said:
"This has come as a pleasant surprise... We would very much
want to become a bank."
At the same time, the country's largest private sector
lender ICICI Bank's CEO and MD Chanda Kochhar said that
banking was "a very complex business" and it needed to be seen
how RBI formulates the entire procedure for giving additional
licenses.

For Anil Ambani group in particular, entering the banking
space has been a long-standing dream and the same has been
stated quite a few times by the group Chairman and other
officials of the group.
"We welcome the announcement that the RBI is considering
the grant of banking licenses to new private players and
NBFCs," said Ghosh of Reliance Capital, whose share price
today soared by over eight per cent.
At the beginning of this year, Ghosh had said the group's
foremost hope for the new year would be change in regulatory
framework to allow new private players in banking sector.
Religare Enterprises chief economist Jay Shankar said,
"It has been a long time since the NBFCs have been demanding
banking licence. This is a positive move and it will augur
positively for the banking sector as well."
"This is a very positive step that will accelerate the
mobilisation of resources for transformational growth in
infrastructure and other productive sectors of the Indian
economy," Ghosh said after Mukherjee's budget speech.
Muthoot Capital Services also welcomed the announcement
and said it would decide on its action plans after the RBI
guidelines come out.
"Indian banking system has emerged unscathed from the
crisis. We need to ensure that the banking system grows in
size and sophistication to meet the needs of a modern
economy," Mukherjee said.
"Besides, there is a need to extend the geographic
coverage of banks and improve access to banking services. In
this context, I am happy to inform the Honourable Members that
the RBI is considering giving some additional banking licences
to private sector players," he added. PTI MBH