Mahindra Finance not to apply for bank licence

The company says RBI guidelines don't provide any flexibility for NBFC and bank to co-exist for a reasonable period of time

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Mahindra Finance – a non-banking financial company (NBFC) arm of Mahindra group has decided not to apply for the bank licence.

“Guidelines don’t provide any flexibility for NBFC and bank to co-exist for a reasonable period of time,” Mahindra Finance said in a filing to Bombay Stock Exchange (BSE).

“The regulations require that cash reserve ratio (CRR) and statutory liquidity ratio (SLR) norms will be applicable from inception, even though building of current account savings account (CASA) will take some time for newly converted bank” the statement further said adding “this anomaly will impose an undue penalty on large asset financing NBFC.”

“If the guidelines are amended to permit co-existence of NBFC and bank in the same group or if concerns are addresses in some other manner, the company will be applying for the banking license,” Mahindra Finance said.