RBI doesn’t permit large industrial and company homes to enter banking sector. However then why did it permit Hinduja group to enter banking. They’re the promoters of Indusind Financial institution.
ANKIT_T:
RBI doesn’t permit large industrial and company homes to enter banking sector.
Indus Ind financial institution was established in 1994. RBI has proven reluctance to provide new licence due to their dangerous expertise in company homes to run banks.
Equally Kotak Financial institution was established in 2003
The final consensus amongst specialists on this discipline is that Company home ought to be evaded proudly owning financial institution licence.
RBI has elevated the promoters stake in a financial institution from 15% to 26%. That is the max promoters can maintain in a financial institution. Indus Ind financial institution at current holds 16% (approx) while Kotak owns 26%
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I don’t precisely keep in mind and I could possibly be incorrect too, however I feel I’ve examine Bajaj Finance needs a banking license.
GB26:
I feel I’ve examine Bajaj Finance needs a banking license
Simply because they need it doesn’t imply they are going to get itIDBI financial institution is up on the market and right now I heard in information that Authorities has disallowed industrial homes from bidding for it as a result of as per RBI norms, industrial teams can’t enter banking.Thats why this query got here to my thoughts. I searched on web however didn’t discover something.
I don’t assume these legal guidelines are written in stone. RBI might change its stance and guidelines relying upon the scenario, arrive at a call case by case.
They are saying India is a credit score starved nation, so a NBFC with good popularity on the road, entrenched deeply into the credit score system, might get an opportunity, who is aware of.
In fact I’m speculating.
When HDFC and HDFC financial institution merger was introduced, Mr.Deepak Parekh had talked about that the latest modifications in rules for non-banking finance corporations (NBFCs) and banks by the Reserve Financial institution of India was one of many key causes for the merger of the 2 entities.
“Few of the rule of thumb was giant NBFCs to be transformed into industrial banks, notably these with over Rs 50,000 crore asset base.NBFC have to comply with the identical NPA classifcation as Banks in addition to liquidity protection ratios.NBFC to comply with core monetary resolution system just like the banks which is following a core banking system and threat primarily based inside audits.These measures have significantly diminished regulatory arbitrage which was there between a financial institution and an NBFC.
Discl: extracts of an interview given by Mr.Deepak Parekh
Different enterprise home owned NBFC can be reluctant to use for licence as a result of they should comply with the 26% promoter/possession rule . It will lead to dilution of their holding.
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I feel Bajaj Finance wished a license. I don’t know the replace.
And clearly any firm will take any determination for its personal profit, so if making use of for a banking license can be helpful, regardless of the dilution, then they might apply, if not no.
Powerful to know lending enterprise for me, so I don’t comply with.