19 cos eyeing bank licence; L&T Fin strong contender

Around 19 companies are eyeing coveted back licence and L&T Finance is one of the strong contenders due to strong backing of corporate group Larsen & Toubro and diversified shareholding.

It is competing against the likes of Shriram Group, which is taking advantage of its 30-year legacy. The company will be applying for banking licence under Shriram Capital, which is the holding company for the group’s insurance, wealth management, broking, and vehicle finance businesses. Also read: RBI sets up committee to review financial benchmarks
But experts believe that Shriram Capital will face a challenge in case of winding up of two of its non banking financial companies (NBFC) businesses, which has an asset management size of around Rs 60,000 cror. But that should not be a problem for Anil Ambani. He has his eyes set on Reliance Bank, which will be promoted by Reliance Capital with the backing of two Japanese firms that is-Nippon Life Insurance and Sumitomo Mitsui Trust Bank.
But the younger Ambani like the Singh brothers-Shivinder Singh and Malvinder Singh- will have tough time satisfying Reserve Bank of India (RBI’s) fit and proper criteria. The Singh brothers are however keen on getting that licence. They had already roped in an American bank Customers Bancorp and they are looking to raise USD 51 million in that deal.
Also, Bajaj family is very keen on getting a licence, but there are issues when it comes to reducing the promoter’s shareholding. Currently the promoter’s shareholding of Bajaj Finserv is currently at 62 percent. There are likes of Videocon Dhoot who is looking for a licence and Infrastructure Development Finance Company(IDFC) who is also a strong contender.
Challenges remain for all of these corporate and financial institutions. Smaller players like SREI and Magma, public sector undertakings (PSUs) like Life Insurance Corporation (LIC), Tourism Finance Corporation, Power Finance Corporation (PFC) are also in the race. So, it is going to be a tough competition for India Inc to win the new bank licence.