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

The Economic Times - - Front Page - Our Bureau

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.

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