This step is in direction of further reforms: L&T Financial

Welcoming the passage of much awaited Banking Amendment Bill, N Sivaraman, president, L&T Financial Holdings told CNBC-TV18, this step is in the direction of further reforms for the financial services sector.

The bill got approval after the government dropped the controversial provisions relating to allowing banks to trade in futures and keeping the sector outside the purview of Competition Commission. Below is the edited transcript of N Sivaraman’s interview with CNBC-TV18. Q: The bill has been cleared by the parliament what is your reaction? A: It is a step in the direction of further reforms and achieving some more progress on the ground on the financial services sector. It is welcome step definitely. Some of the enablers that have come into the bill, which is in the form of voting rights make promoter of a new bank feel comfortable because he doesn’t get reduced to 10 percent. You have 40 percent financial stake but you can vote only 10 percent and because of some situation you end up losing control, that doesn’t happen so easily. It protects the interest of the large financial investors into the banks. Q: Sourced based information says preference is likely to be given to NBFCs as applicants for new licenses. What is your take on this? A: We will look at it as an expansion of services and then make sure that we are in a position to really build our business. Economics of this will have to be seen in context of the real guidelines that will come out. I would like to wait till the guidelines come in and then may be make up our minds on what we need to do. Q: What would you like to see which will ensure that you will be one of those applicants for a proposed bank licence? A: From an eligibility criteria point of view, I don’t see any concerns, both at the parent company levels and L&T financial services holding company level. The shareholding structure is very transparent and very well diversified. What RBI has put in as a disqualification does not impact us. We have a large balance sheet. So, all of this is something which will make us as an interested party in the licence definitely, but we will have to see the way licence guidelines will come through.