Saikat Das
moneycontrol.com
Vikram Pandit, former Citigroup CEO who on Thursday joined the board of the JM Financial, undoubtedly is a trump card for the company's proposed banking foray.
Pandit is one of the reputed names in the global financial services industry, with close to three decades of experience.
JM Financial shares on Friday surged 15 percent to hit a 52-week high of Rs 27.70 on NSE. However, the market optimism may be lacking a rational approach.
"For banking licence, RBI will prioritise the brand factor first," a senior RBI official told
moneycontrol.com on condition of anonymity.
"Licence cannot be given to any corporate without proper credential. In that case, it will be misused. Companies may use their banking network to support their group company businesses. However, nothing is finalised. The entire process of banking licence will take time, at least a year," the person said.
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Financial inclusion, Pandit's key challenge in JM deal: E&YA banking licence will gives access to low cost funds through public deposits while corporates raise funds at much higher cost. Earlier, RBI governor D Subbarao had hinted that the licencing process would not be finalised during his stint. He will demit office in September this year.
Who are potential candidates for licence? Going by the view, companies like Tata, L&T, Mahindra, and Bajaj are believed to be the front-runners for banking licences. Moreover, the clause of 25 percent branches in unbanked rural centres of population below 10,000, is also seen a key to issue licence.
The mandatory requirement for setting up rural branches will also be one of the determining factors. This in turn, enhances chances for entities like Shriram group.
Where does J M Financial stand?J M Financial, according to market participants, will face a stiff challenge from contenders it is pitted against.
And while the stock surged 15 percent on the announcement, brokers said the rally was sentiment-driven more than anything else. It is too early to say if the stock will be re-rated.
JM Financial shares which hit a peak of Rs 158 during the peak of the 2007-08 bull run is now quoting at less than a fifth of that level.
How vital is Vikram?Vikram Pundit - an international banker who is credited with turnaround at Citi post the financial crisis, will be key to JM Financial's fortunes, should the license come through.
"Nimesh Kampani (promoter of J M Financial) seems to be a bit more ambitious about his banking foray. He would not have hired Vikram without any specific business motive. On the other hand, RBI is an internationally acclaimed regulator. It is not expected to indulge any deviation from stated stand. We need to wait and watch on how things pan out in future," said a market commentator on condition of anonymity.
saikat.das@network18online.com 
