With only six days left, more corporates have started showing interest to enter into private banking space.
The latest to announce its intention is Reliance Capital of Anil Dhirubai Ambani Group (ADAG). In a notification to stock exchanges on Wednesday, the group informed that it will be submitting an application for a banking licence with the Reserve Bank of India. Sumitomo Mitsui Trust Bank (SMTB) and Nippon Life Insurance, two leading financial institutions from Japan, propose to take between 4-5 per cent stake each in the new bank subject to necessary regulatory approvals.
Hitoshi Tsunekage, CEO, SMTB, said in statement that through its collaboration with Reliance Capital it was hopeful of making a contribution towards the development of the Indian financial industry.
On Tuesday, the board of directors of Aditya Birla Nuvo gave its nod for the company to enter the banking space.
Earlier, on June 18, the directors of IDFC had approved a resolution for a similar move. SREI Infrastructure Finance and Edelweiss Financial Services too have announced their intentions to seek banking licence.
Religare
Religare Enterprises, for its part, has taken a strategic decision to apply for a banking licence. As per the RBI guidelines, the promoter group can promote a bank through a non-operative financial holding company (NOFHC). Such NOFHC should be owned by promoter group companies in which public holding should be at least 51 per cent.
The company informed the stock exchanges that its directors have decided to set up an NOFHC as and when required as a wholly-owned subsidiary of Religare Enterprises, and have requested promoters to consider diluting their shareholding to 49 per cent in the company.
The company has informed the stock exchanges that Customers Bancorp Inc., (CUBI), a Federal Reserve Regulated bank holding company and trading on the NASDAQ, has agreed to invest $ 51 million through its investment holding company in Religare Enterprises through a combination of primary and secondary market investment. CUBI shall make a secondary purchase of $ 22 million of equity shares of the company from promoters. The promoters will be selling the shares as part of their 22 per cent divestment to bring down their shareholding to 49 per cent to qualify Religare Enterprises to set up NOFHC. This transaction would be done as per applicable law at the prevailing market price on the date of purchase. In addition, CUBI shall make an investment for the Indian rupee equivalent of $ 28 million in compulsory convertible warrants issued by the company on a preferential allotment basis, as per SEBI floor price as per applicable law. The warrants would be convertible into equity shares in maximum of 18 months. CUBI will also subscribe to common equity shares for the Indian rupee equivalent of $ 1 million on a preferential allotment basis, as per SEBI floor price. The equity shares and compulsory convertible warrants would be allotted on a preferential basis as per provisions of SEBI (Issue of capital and disclosure requirements) Regulations, 2009 and other applicable laws and regulations.
Magma Fincorp
Magma Fincorp Limited, a leading NBFC, too has decided to apply for a banking licence. The company's board, which met on Wednesday, approved the decision to go ahead with the application process. The company feels that the RBI’s proposal of an 18 month window from the date of in-principle approval to commence banking operations would provide sufficient opportunity to make a transition to a bank with minimum disruption in the normal business of the company.
While Shriram Capital has expressed its desire to enter banking, Tata Capital will be reviewing the RBI guidelines before announcing its decision.
M&M Financial services, however, has decided not to apply for a bank licence.
