Edelweiss to seek licence from RBI to set up bank

Plans to transfer merchant banking business to subsidiary

Edelweiss Financial Services Ltd today said its board of directors has approved a proposal to apply to Reserve Bank of India for setting a new private bank. It will transfer its existing merchant banking business to subsidiary as a step to comply with norms prescribed by RBI for new banking license.

It will make an application to the RBI for a Banking License, in accordance with the provisions of the Guidelines for Licensing of New Banks in the Private Sector dated February 22, 2013, the company informed the Bombay Stock Exchange (BSE).

Other financial sector players who have expressed intention to get into banking include JM Financial in collaboration with Vikram Pandit (ex-Citi Bank chief), Infrastructure finance entity IDFC, Religare Enterprises and Tourism Finance Corporation of India (TFCI).

The last date for filing application for banking license with RBI is July 01, 2013. RBI while issuing clarification on new bank licence guidelines said, the entities getting licences to open new banks will be given 18 months to open branches against 12 months prescribed earlier. The promoters would have to transfer their holdings to the non-operative financial holding company (NOFHC) in a stipulated period.     

The NOFHC envisages holding of the bank and other regulated financial services entities of the promoters under the NOFHC and prudential exposure norms for the regulated entities. India has 26 public sector banks, 22 private sector banks and 56 regional rural banks.

Meanwhile, board approved induction of Rujan Panjwani as an Executive Director. It also gave nod for reappointment of Rashesh Shah as the Managing Director and Venkat Ramaswamy as an Executive Director.

It will also alter the Main Objects Clause of the Memorandum of Association and transfer of merchant banking business to a subsidiary of the company as a going concern. This will be subject to statutory and shareholders’ approval.