Birla group to set aside Rs 625 cr for financial biz

The Aditya Birla Group is planning to set aside proceeds of $100 million (about Rs 625 crore) from the sale of its business process outsourcing (BPO) company for its financial services business, according to a senior company official. While Birla-owned Aditya Birla Nuvo has applied for a banking licence, the group's financial services vertical is under Aditya Birla Financial Services.

"We believe we are a strong candidate, since our capabilities meet the relevant parameters required for running a bank. From the structuring point of view, too, we meet all RBI (Reserve Bank of India) norms," said Sushil Agarwal, whole-time director and chief financial officer of Aditya Birla Nuvo. The company earned $260 million (Rs 1,625 crore) from the sale of BPO company Aditya Birla Minacs.

Agarwal said the group's financial services business was trusted by five million customers, adding the group was managing $20 billion of public money. "We have a strong parent brand. Aditya Birla Group, through many decades of service to customers and its deep involvement in the community, has emerged as one of the most trusted brands in the country. Hence, as trust and brand name are critical factors in growing a bank, since it involves managing public money, we have a good chance," he added.

ASPIRING BANKER

• The Aditya Birla group earlier owned Kolkata-based UCO Bank, nationalised in 1969
• The group's financial services businesses serve five million customers and manage Rs 1.3 lakh crore worth of public money
• The group's corporate social responsibility activities serve seven million people annually across 3,000 villages
• Group company Hindalco is named in the coal block allocation scam. The Reserve Bank of India is seeking the opinion of all other regulators and investigative agencies. Till the company's name gets cleared by the Central Bureau of Investigation, the group's application is likely to remain on hold

Earlier, the group owned Kolkata-based UCO Bank, which was nationalised by the government in 1969. Now, if the group is given a banking licence, it will use its own brand name. On rural reach, Agarwal said the group has nationwide presence and, through its corporate social responsibility activities, caters to seven million people annually, across 3,000 villages. "Our telecom arm, Idea, has 129 million subscribers. Our fertilisers business is serving thousands of farmers in more than four states. Our group companies Hindalco, Essel Mining and Grasim have plants and presence in various rural locations," he added. He said the Aditya Birla Group was widely acknowledged for strong risk management, good corporate governance, capability to provide capital support and ability to attract talent. "All these factors will help us in our application."

Analysts say the fact that group company Hindalco has been named in the coal block allocation scam could be a challenge. As RBI is seeking the opinion of all regulators and investigative agencies before awarding banking licences, till Hindalco is cleared by the Central Bureau of Investigation (CBI), the group's application is likely to remain on hold. Reports say CBI is on the verge of closing the case against the company and will inform the Supreme Court of this at the next hearing on the case.

Kumar Mangalam Birla, chairman of the group, had quit the RBI board in July 2013, as Aditya Birla group had applied for a banking licence.