Which of the 26 applicants deserve Bank license?

As the debate on the choice of probable licensees hots up, here is an interesting debate in moneycontrol.com between three experts

See Copy of the Detailed debate here

The three experts who have expressed their views are R Jagannathan, the Editor Firstpost, Haseeb Drabu former chairman J&K Bank and former editor Business Standard and a columnist with Livemint, and B D Narang former chairman of Oriental Bank of Commerce and now director of many companies. The experts have concluded that they would prefer to categorize the applicants into different categories namely NBFCs-pure play, NBFCs backed by Corporates, NBFCs backed by Government,  Brokerage and Real Estate Firms, Corporates in the private sector, Public sector companies and Government owned entities.

All experts are unanimous on rejecting the applications of the brokerage firms and real estate companies. Most also eliminate corporates on the basis of conflict of interest. Pure play NBFCs are being preferred with Shriram and SREI Infrastructure Finance as preferred candidates in this category. In the corporate backed NBFCs, Bajaj FInServe and L&T Finance are preferred. In the Government sector, Postal Department is the preferred applicant with LIC Housing Finance the next preference. One of the experts have preferred both Tatas and Birlas for the license though other two have not shown the inclination.

We thus have six candidates who seem to have passed this short listing exercise and if we add the Tatas and Birlas, it adds upto 8 inthe short list.

I am happy to note that the experts have given weightage to the “Financial Inclusion Capability” as one of the criteria for selection. I cannot but agree with this criteria as the main parity breaker as I have indicated in my earlier post.

Based on the views of the experts the following 18 applicants are considered as not suitable for the award of the license.

1.India Infoline Ltd., Mumbai
2.Religare Enterprises Limited, New Delhi.
3.J M Financial Limited, Mumbai
4.Muthoot Finance Limited, Kochi
5.UAE Exchange & Financial Services Ltd., Kochi
6.INMACS Management Services Limited, Gurgaon.
7.Smart Global Ventures Pvt. Ltd., Noida.
8.Indiabulls Housing Finance Limited, New Delhi
9.Suryamani Financing Company Limited, Kolkata.
10.Janalakshmi Financial Services Pvt. Ltd., Bangalore
11.Magma Fincorp Limited, Kolkata
12.Bandhan Financial Services Pvt. Ltd., Kolkata
13.Edelweiss Financial Services Limited, Mumbai
14.Tourism Finance Corporation of India Limited, New Delhi
15.IFCI Limited, New Delhi
16.IDFC Limited, Mumbai
17.Value Industries Limited, Aurangabad
18.Reliance Capital Limited, Mumbai

This leaves the following 8  candidates in the fray as preferred candidates  namely

1. TATA Sons Limited, Mumbai.
2. Aditya Birla Nuvo Ltd., Mumbai.

3.Bajaj Finserv Ltd., Pune
4. L & T Finance Holdings Limited, Mumbai

5.Shriram Capital Limited, Chennai.
6.SREI Infrastructure Finance Limited, Kolkata

7. Department of Posts, New Delhi.
8. LIC Housing Finance Ltd., Mumbai

I will expand on my comments in my next post.


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About Vijayashankar Na

Naavi is a veteran Cyber Law specialist in India and is presently working from Bangalore as an Information Assurance Consultant. Pioneered concepts such as ITA 2008 compliance, Naavi is also the founder of Cyber Law College, a virtual Cyber Law Education institution. He now has been focusing on the projects such as Secure Digital India and Cyber Insurance
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