The equity market is expecting Larsen and Toubro Finance and IDFC getting the new banking licence, for the simple reason that there’s no pedigree issue with them ,says CNBC-TV18’s Latha Venkatesh.
Given than Aditya Birla Nuvo has a fairly good chance to get a licence, it would be the one stock one would play because they have applied through the company. There is a stock that one can play on if one believes that they will get but the investors may want to play it safe. With L&T it is just a diversified ownership and with IDFC as well no single identifiable. So, it is just a safe play in that stock.
The Bimal Jalan panel is unlikely to give it to a big conglomerate or corporate houses or brokerages or even real estate companies. They are steering clear and so is the market. But there is no reason why Jalan has to be so careful. He could well just say that all these companies are financially sound and now RBI should take the call on whom it should give its licence to.
The role of Jalan Committee
Normally, the RBI would go strictly by what the Jalan Committee says because this is a very respected committee. There are established people in the committee - Bimal Jalan, Usha Thorat, CB Bhave – these are three people who have been regulators par excellence.
So, RBI would never think that they would have or they need to have a bandwidth beyond what these regulators bring to the table. They have seen regulations from all angles. The RBI would not normally want to overrule them and get into a sticky situation.
However, they may have to because not all the investigative agencies have given their inputs on all the candidates; there is one or two left. So, it is possible that the Jalan Committee will recommend with caveats saying that we have not got full information on a few.
It is possible therefore, that a situation may come where the entire list is recommended by Jalan is not given licence.
It is possible therefore, that a situation may come where the entire list is recommended by Jalan is not given licence.
Can the RBI add names to the list?
It is extremely unlikely. I would almost say no but one can never say never.
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