Bank licence norms not discriminatory: Kumar Birla

Aditya Birla Nuvo says the company board has approved its proposal to apply for bank licence

Kumar Mangalam Birla, Chairman, Aditya Birla Group, on Wednesday favoured the new bank licence norms by saying the norms are not discriminatory towards large corporate houses.

“The banking guidelines are very clear and not discriminatory towards large corporate houses,” said Kumar Birla, while speaking to reporters on the sidelines of a conference organised by Federation of Indian Chambers of Commerce and Industry.

For the first time since the banking sector was opened up for private sector players, the Reserve Bank of India (RBI) has decided to allow large industrial and business houses in the banking sector, paving the way for entities like Tata Group and Birla Group to to foray in banking.

Yesterday, Aditya Birla Nuvo said the board of the company has approved the proposal to apply for the bank licence. Aditya Birla Nuvo is the holding company of Aditya Birla Financial Services, which is the Birla Group’s non-banking financial company (NBFC).

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

The final guidelines on bank licence, which was released by RBI in February, is seen as ‘stringent’ by a few entities and was criticised on the ground that it does not provide adequate transition time. M&M Financial Services — the NBFC arm of Mahindra & Mahindra Group, which was initially keen to enter the sector but later decided to pull out as it felt the guidelines imposed an undue penalty on large, asset financing NBFCs..

In the final norms, RBI has mandated 25 per cent of branches for new banks in unbanked rural centers. It has clarified the banks would have to follow cash reserve ratio and statutory liquidity ratio norms from the inception of the bank. The central bank would give new banks 18 months’ time to start operations after it issues them in-principal approval.