From Tata, Birla and Ambani to ambitious financial services entrepreneurs, everyone sees money in a banking licence. But cut to the core, and what you find is a clear play on the India growth story, and not much else
The official reason why the RBI opened a cautious window to give wannabe bankers a chance to try their hand at this craft is to bring a large section of hitherto unbanked and under-banked population into the folds of the organised financial system. For the first time, it is also going to allow big industrial houses to come in. History suggests that private players can never be serious about inclusion unless there is money to be made. The burden of inclusion is largely that of the politically-driven public sector.
The second bucket comprises players who are in a focussed line of business and want access to one of the following: Cheaper funds, or a more diversified portfolio of assets. In this bucket one would put LIC Housing Finance, IDFC, IFCI and Tourism Finance Corporation of India. LIC Housing wants to access cheaper public deposits and expand its product offering; IDFC wants to get out of the straitjacket of infrastructure lending, as this sector is vulnerable to policy setbacks; IFCI and Tourism Finance are parent and offspring, and thus want to balance their deadbeat development finance brief.
The bottleneck, some believe, will be in getting the right kind of bankers on board—even before getting a licence. The Religare Group of the Singh brothers (Malvinder and Shivinder) has thus begun tanking up on talent. Apart from Srikrishnan, it has roped in former Canara Bank Chairman AC Mahajan and former finance secretary Arun Ramanathan.
(This story appears in the 09 August, 2013 issue of Forbes India. To visit our Archives, click here.)