Professionals, Fin Cos may Get Licence to Bank
RBI proposes minimum 500 cr capital for on-tap licences for universal banks, but many big conglomerates may still not make the cut
Mumbai: Professionals and finance companies will get a chance to set up banks but many large business houses which have long dreamt of owning such institutions may not be so lucky. The Reserve Bank has come out with draft rules that propose a minimum capital of .₹ 500 crore for granting on-tap licence to new “universal banks” which can function like high-street lenders offering loans, accepting deposits and carrying out fee-based services.
While opening the doors to professionals with a minimum experience of 10 years and giving large non-banking finance companies an opportunity to convert into banks, RBI has said industrial houses and conglomerates that have more than 40% of total business from non-financial activities will be barred from promoting banks.
individuals and banking professionals with 10 years of experience in banking and finance can apply to start a new bank
RBI has said corporates will not be allowed to hold more than 10% in a bank
finance companies such as Edelweiss, SKS Microfinance, SREI, IIFL and LIC Housing Finance
Bharat first came to limelight in May last year when he was sent to judicial custody on charges of instigating a clash between Haridwar truck union members and guards of Ramdev’s Patanjali Food and Herbal Park in Haridwar when one person was killed and four were injured.
It doesn’t seem to have affected his professional commitment as Patanjali, which also has businesses and foundations related to education and research, has emerged perhaps the fastest growing FMCG maker in the country. In recent months, it has hired hundreds of professionals from rival firms. “The top management team will have to focus on making room at the top for the professionals joining them. But it is clear that unofficially Ramdev is the chairman, Balkrishna the MD and Ram Bharat the CEO although, it is not seen in good taste to talk of rank and designations within Patanjali,” said a company insider.
For a company that started as a small pharmacy in 1997, Patanjali has expanded its reach from 200 outlets in 2014 to 10,000 franchise stores at present and launched more than two dozen mainstream FMCG products. No other herbal products maker has forayed into categories such as noodles, oats and detergents.
Most of Patanjali’s products are 15%-20% cheaper than leading brands, forcing many of its peers to launch offers and promotions to counter its rising popularity.
“We believe the competitive pressure from Patanjali in select categories like toothpaste, honey, hair oil, chyawanprash, biscuits and shampoos could continue to disrupt the competitive sector balance in FY17,” wrote Prasad Deshmukh of Bank of America Merrill Lynch in a recent note.