Banking licence: ADAG ropes in Japan majors, Spice joins race

With 1 July deadline fast approaching, race for banking licence is hotting up. Aspirants are in hectic parleys for partners or are rearranging their ownership structure to ready themselves for banking foray.

More companies are joining the list of aspirants, with the latest, as per a report in the Economic Times, being the Spice Group of BK Modi.

Here is a low-down of all the action that is taking place in the space:

RADAG: According to a report in the Economic Times today, the group’s Reliance Capital plans to spin off its consumer lending operations and rope in SumitomoMitsui Trust Bank and Nippon Life Insurance, as partners. It expects the presence of the two Japanese financial services giants boost its chances. Both the foreign partners will remain strategic investors in the company with about 4.99 percent stake, the report said. All the three companies have offered no comments for the report.

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[caption id=“attachment_906555” align=“alignleft” width=“380”] The board of the holding company of the Aditya Brila Financial Services has approved applying for banking licence. Reuters[/caption]

Spice Group: The BK Modi-led group is also trying to rope in a partner. It will be from Singapore, says the ET report. The Monetary Authority of Singapore is a strict regulator and a partner from there will add credibility, DR Mehta, an advisor to the group, has been quoted as saying. The company’s plan is to leverage its telecom operations and set up a high technology bank. Considering the increased acceptance of mobile and online banking, Spice’s proposal indeed holds water. It is to be remembered that Bharti Airtel had also once tried to get a banking licence. But that was long before the RBI had any plans to issue fresh banking licences.

Aditya Birla Nuvo: The board of the holding company of the Aditya Brila Financial Services has approved applying for banking licence. According to a report in the Business Standard, Aditya Birla Financial Services has already started focussing on rural areas and setting up branches there. This is aimed at impressing up on the central bank, which has mandated that 25 percent of the branches of the new banks should cater to the unbanked hinder lands.

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Videocon Industries: The company applied for banking licence on Tuesday. As per an earlier CNBC-TV18 report, the company will create a separate subsidiary and will be roping in a foreign partner. However, one of the group companies will be divesting a part of its stake to this international partner, it said. Videocon will, however, hold a majority stake in the new subsidiary. It has set aside Rs 1,000 crore for its banking foray.

**Religare Enterprises:**The company is a long time aspirant for the licence. Billionaire promoters Malvinder Singh and Shivinder Singh plan to sell 22.75 percent stake in the company in its bid to meet the RBI’s norms, a report in the BS said earlier. It has appointed Canara Bank Chairman A C Mahajan and former finance secretary Arun Ramanathan as independent non-executive directors, the report said.

The other companies that have evinced interest in getting a banking licence include Infrastructure Development Finance Company, Larsen & Toubro, Shriram Finance, Power Finance Corp and our own Life Insurance Corporation. One company that has opted out of the race is Mahindra Finance. It has also criticised the RBI guidelines saying they are biased against bigger NBFCs.

One company which has not yet moved ahead after spiritedly arguing why it should get a bank licence is Sahara. The reason for this should be anybody’s guess.