Not decided yet on on-tap bank licence appln: Bajaj FinServ

It is too early to say if Bajaj Finserv will use the Reserve Bank of India's new on-tap universal banking license initiative to apply for a license, said MD, Sanjiv Bajaj in an interview to CNBC-TV18. Since it is now on-tap application, we would prefer to wait and apply at an appropriate time, he said.

RBI on Thursday announced draft guidelines for "on tap" licensing of universal banks in the private sector. Finserv had applied for a universal banking license in 2013 but was not granted it then.

Bajaj pointed out that apart from providing current account or saving account deposits (CASA) and few other services, the company already does most of what other mid-sized banks offer.Below is the verbatim transcript of Sanjiv Bajaj's interview with Anuj Singhal and Ekta Batra on CNBC-TV18.Ekta: Do you qualify?A: That is a good question and I don\\'t know. The guidelines have got certain exclusions. As you know they have said big business houses can only own up to 10 percent. However, they have defined industrial houses in a particular manner basically saying that those whose total assets or gross income from their non-financial activity is more than 40 percent. So, we are still working out to see whether we qualify as a group or not and it is a completely separate question whether we will apply or not. So, you are assuming that one may result in the other, it is not necessarily true.Ekta: So, are you going to apply in case you do qualify?A: It is too early to say. We did apply the last time when it had opened up in 2013 because we must remember at that time it was only for a defined period. Reserve Bank of India (RBI) is to be commended with the variety of licenses that they have come out with over the last year and the fact that this is on tap. This is very important. You don't want everybody rushing at the same time. People need to time when it is right for them to move ahead.Also what is very important and it has even changed in the last three years is the entire disintegration that is happening in banking, in the US, UK, China where you no longer need to be a universal bank. Leveraging technology and leveraging the fact that our population has a mobile phone in their pocket all the time it is going to be very interesting to see what kind of a model lenders come out with and we for one very clearly are placing large bets on how the entire digital ecosystem is going to help us build Bajaj Finserv and hence it is not a clear answer for us today. So, do we qualify, answer I don't know right now.Second, would be automatically apply, not necessary and third, the fact that it is on tap we can decide when is the right time and more importantly does it even make sense to go for a monolithic license.Ekta: You have developed a strong run rate in terms of the disbursement, the loan growth, the consumer finance outlook that you have and your lending capabilities there. Then does it actually make sense for you to diversify or to expand to get a universal license or would you rather have a niche and excel in that niche?A: A bank typically does four things. A bank offers loans, we today offer loans not only in consumer segment but to SMEs, to mid market customers and to rural customers. So, we already are doing more than what most midsized and small banks do.Secondly bank manages payment transactions. Today we can't do that but we can always tie up with just a payment bank to do the same who is not competing with me on the lending side.Third thing bank offers you investment services, we have a relationship vertical within Bajaj Finance that offers investment services to our customers as well, so we are already offering that as a distributor.The fourth is that your bank protects your money by keeping your money there. In our case that is the one thing that we can\\'t do. We can't open Current Account, Savings Account (CASA), but we do have a fixed deposit license. So, in many ways either ourselves or though some interesting tie ups which are now possible because of the variety of bank licenses available we could essentially end up offering 70-80 percent of what a universal bank offers without a full universal bank license.