Aditya Birla Nuvo to apply for bank licence

Aditya Birla Nuvo, the holding company of Aditya Birla Financial Services, the Birla group's non-banking financial company (NBFC), on Tuesday said the board of the company has approved the proposal to apply for the bank licence.

Aditya Birla Group chairman Kumar Managalam Birla today welcomed the the new licensing norms for private sector banks saying the norms are not discriminatory towards large corporate houses.

The new licensing norms announced by the Reserve Bank of India opens up the banking sector for private sector players, including large industrial and business houses, paving the way for entities like Tata group and Birla group to to foray into banking.

"The banking guidelines are very clear and not discriminatory towards large corporate houses." Kumar Birla, told reporters on the sidelines of a conference organised by Federation of Indian Chambers of Commerce and Industry (FICCI).

RBI is in the process of granting fresh banking licences and has set 1 July as the deadline for applying for the same.

The final guidelines on bank licence which was released by RBI in February are seen as more stringent by a few entities and has been criticised on the ground that it does not provide adequate transition time. RBI has mandated tat 25 per cent of branches for new banks should be in unbanked rural centers. It has also clarified that the banks will have to follow cash reserve ratio (CRR) and statutory liquidity ratio (SLR) norms from inception of the bank.

The central bank will give new banks 18 months time to start operations after it issues them in-principle approval.   

With deadline for applying for new bank licences approaching, a number of big corporates, including IDFC, Reliance Capital, Videocon Group, Magma Finco and the BK Modi-led Spice Group, are applying to the RBl for a banking licence. M&M Financial Services, the NBFC arm of Mahindra & Mahindra Group, which was initially keen to enter the sector, later decided to pull out as it felt that it impose an undue penalty on large asset financing NBFCs.