After getting the go-ahead from the Reserve Bank of India (RBI), IDBI Bank is all set to apply to the Securities and Exchange Board of India (Sebi) for a mutual fund licence.
According to sources, IDBI Bank is currently going solo, but it may rope in a joint venture partner later. The board of directors of IDBI Bank has already approved the proposal at its meeting held on April 24.
IDBI Bank will have to set aside Rs 10 crore (Rs 100 million) as minimum paid-up capital to set up the asset management company (AMC). We have recently got an approval from RBI to set up an AMC. We will soon be approaching the market regulator for clearance, said IDBI chief financial officer (CFO) R K Bansal.
It is interesting to note that IDBI Bank had an AMC in joint venture with the Principal Financial group of the US way back in 2000. However, it exited the JV in 2003 by divesting its 50 per cent stake in IDBI-Principal AMC to the joint venture partner for Rs 94 crore (Rs 940 million).
The mutual fund industry, which has an average assets under management of Rs 4,93,286.56 crore, currently has 36 players with Shinsei being the latest entrant. The penetration of mutual funds in India is only 4 per cent of the GDP, a reason why global and domestic players have been