Indiabulls, Dewan Housing Finance may be out of reckoning.
With the Reserve Bank of India (RBI) proposing that industrial groups or non-banking finance companies (NBFCs) with interest in real estate not be given banking licences, firms like Indiabulls Financial Services and Dewan Housing Finance Ltd (DHFL) might be out of the reckoning.
“Industrial and business houses engaged in real estate activities either directly or indirectly should not be allowed to promote banks; given the sensitivity of the real estate sector, any sub-version of the Chinese walls between the bank and the rest of the group could have extremely negative consequences for financial stability,” RBI said in a discussion paper on entry of new banks in the private sector.
RBI has invited comments on the paper till September 30.
When contacted, Indiabulls Financial Services CEO Gagan Banga declined to comment, saying that he would only comment once the final guidelines came out. According to media reports last week, Indiabulls was not keen on acquiring a banking licence and, instead, will pursue an infrastructure NBFC status in the future.
Indiabulls started out as an internet broking company before diversifying into lending, mortgages, real estate and power. The group has four listed entities — Indiabulls Financial Services (IFS), Indiabulls Securities, Indiabulls Real Estate and Indiabulls Power.
DHFL Chairman and Managing Director Kapil Wadhawan could not be reached for comment.
DHFL’s promoters Kapil Wadhawan and his brother Dheeraj Wadhawan launched a real estate firm by the name of RKW Developers late last year. The company has launched premium residential projects in Mumbai under the brand ‘Dheeraj Realty.”
Kapil’s cousin Sarang Wadhawan runs Housing Development and Infrastructure Ltd (HDIL), the country’s third-largest real estate company by revenue. The Wadhawan family brokered a restructuring agreement in 2009 to divide its businesses.
Sarang Wadhawan and his father Rakesh Kumar Wadhawan took complete charge of HDIL, while Kapil and Dheeraj Wadhawan took over the management of DHFL, Wadhawan Retail Pvt Ltd, Wadhawan Global Resorts and Hotels Pvt Ltd and Wadhawan Lifestyle Retail Pvt Ltd.
Indiabulls shares fell 3.08 per cent on the Bombay Stock Exchange to close at Rs 157.25 on a day that saw the benchmark Sensex fall 0.8 per cent. DHFL’s scrip also fell 2.96 per cent to close at Rs 265.35.