Indian companies' long wait to promote banks may come to an end if the Reserve Bank of India softens its stand and accepts the Tarapore committee's recommendations on the issue. Under the existing policy, the RBI has capped the holding of companies in banks at 10 per cent.
Several business houses have been keen on launching banks. The foremost in the list is the country's second-largest business house, the Tata group.
Tata Finance, a non-banking finance company, was launched long ago with the aim of converting it into a full-fledged bank. It was later brought under Tata Motorfinance, the vehicle financing division of Tata Motors, after it was involved in a dubious exposure in the stock market.
Industry sources said the Tata group might be the first on the block to set up a bank once the Tarapore committee recommendations to allow corporates to promote banks on a case-to-case basis were accepted.
They reasoned that Tata Motorfinance had last week launched a subsidiary to carry out non-banking finance operations. Besides, the group was also into retail business. "The Tata group has the vehicle to enter the banking space and it has got retail expertise. So, if allowed, it will take no time to enter the banking space," the sources pointed out.
Anil Ambani too has made public his interest to enter the banking industry. Ambani is already into all segments of the financial market, except banking. He has operations in mutual funds, insurance and capital market services and recently launched an asset reconstruction outfit.
In addition, he also has retail experience through his telecommunication company.
"With the addition of a bank, he will offer the full range of financial services in the country," an analyst said.
Global giant GE has also been trying to enter the Indian banking industry for quite some time now. Its banking subsidiary in Hungary, Budapest Bank, had last year planned to approach the RBI for a banking licence.
The move followed GE's failure to get the RBI nod on acquisition of a private sector bank.
GE has drawn up plans for expanding its retail banking operations in developing countries, including India, as it considers these markets "underbanked". It is also looking at Russia, Malaysia and Indonesia.