We have committed Rs 1,300 cr initial capital for a bank: Rashesh Shah

Interview with Chairman & CEO, Edelweiss Financial Services

A healthy track record and 17 years of experience in financial services would be the key strengths of Edelweiss Financial Services in setting up a bank, says chairman and chief executive officer Rashesh Shah, in an interview with Manojit Saha. Edited excerpts:

Why do you expect Edelweiss to secure a banking licence?

There are four-five reasons why we are in a strong position. First, we are essentially a financial services company, with a track record of 17 years. During these years, we have added many businesses and provided intermediation between providers of capital and end-users. We have a good financial and compliance track record. So, we are fit and proper.

We also have a good credit business on both wholesale and retail sides. In India, banking is a fairly broad-based business, not a narrow-based one. Banking is not only about technology; one also needs credit capability, underwriting skills, liquidity and treasury management, etc. We have both wholesale and retail credit businesses. We also have a treasury that manages Rs 15,000 crore of assets. So, we have all the building blocks required to become a bank. We are fairly well capitalised; our group’s net worth is Rs 3,000 crore and we have committed Rs 1,300 crore as initial capital for the bank, against the regulatory requirement of Rs 500 crore.

So, capital-wise, too, we are fairly strong. We have a fairly wide reach in the country—we are present in 250 cities through our housing finance and insurance business, with more than half a million customers.

What is the plan to push the financial inclusion agenda, the theme for banking licences?

As far as financial inclusion is concerned, I think there are very broad opportunities. It could be harnessing savings from rural savers and providing credit. One of our focus areas would be tapping urban migrant workers and providing financial services.We have also tied up with a couple of agencies to provide credit to rural customers. We see a lot of financial inclusion opportunities in the small and medium enterprise sector.

What changes would Edelweiss have to make to comply with the Reserve bank of India’s final norms on corporate structure?

Edelweiss Financial Services is a listed company, in which more than 60 per cent of the shares are owned by the public—promoter holding is less than 40 per cent. According to the norms at least 51 per cent of the promoter group-controlled company has to be owned by the public. From a public shareholding point of view, we are listed; we have more than 51 per cent public shareholding. All we have to do is form a non-operative financial holding company and put the other companies under it. But in Edelweiss Financial services, we don’t have to make any structural changes.

What would be your key strength to become successful as bank?

There are a few things that are key to the success of any bank—technology, risk management, customer service, etc. If one can do these few things right, the opportunity is huge. One has to be patient and take a 10-year view. I don’t think any bank could be an overnight success. We are very confident we can build a strong institution over seven-10 years..