Not given small bank licence, DHFL to apply 'on tap' later

Although disappointed with not getting the small finance bank licence, Chairman and Managing Director, Kapil Wadhwan, DHFL said for them it is back to business as usual. The company will, though, look forward to the virtual on-tap licencing window when the RBI launches it in future, he said. 

DHFL was one of the applicants among the many that had applied for a "small finance bank" licence but its name did not figure amongst the 10 that were announced to have been given licences last week, largely microfinance institutions.When asked if they would further reduce the base rates, deposit rates, he said they are eagerly waiting for the upcoming RBI monetary policy.

The house had already cut its deposit rates by 25 basis points this month, he said. There is certainly room for a rate cut but would look at cost of funding before taking a all, he said.Below is the transcript of Kapil Wadhawan’s interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18. Sonia: How much of a disappointment is it that you did not get the small bank license and would you still go ahead and wait for the on-tap licenses to come through? A: Surely, I think a bit disappointed but I guess it is business as usual for us. It seems that Reserve Bank of India (RBI’s) focus this time around has been on the micro-finance institutions and how they can be bought under the banking net. So, yes, we look at the virtual 'on tap' licensing opportunity as an opportunity going forward to make an application. However, yes, it is business as usual for us and we keep on going on our business on the holding finance side. Latha: You have any idea why you didn’t get a license? A: It is difficult to say, I guess RBI is the best agency. Latha: But they will tell you rather than us? A: As I said the focus this time around has been on the micro- finance institutions. If you look at the list of the ten successful applicants, nine of them nearly are small micro-financing institutions. I guess the focus has been largely been around financial inclusion through that segment rather than focusing on large entities like ourselves. We have built a successful franchise over 30 years. Yes, they were very positive, as I said we are little disappointed but yes surely not disheartened because this is business as usual for us. Latha: Are you all dropping any of your base rates or lending rates or anything because of the falling RBI repo as well as competition from banks? A: We have reduced our deposit rates. We are a deposit taking housing finance company with more than Rs 4,500 crore of outstanding deposits. We have reduced our deposits rates just this month by 25 basis points. Eagerly await the outcome of the RBI’s outlook on interest rate in the next couple of days. We believe that there is an opportunity for an interest rate cut. However, surely, will look at our cost of funding before we decide to do so.