IndusInd Bank debuts on Nifty; shares soar 3%

IndusInd Bank, state-run NMDC replaced IT major Wipro and diversified group Siemens on the 50-share benchmark

IndusInd Bank today debuted on the National Stock Exchange index Nifty amid strong buying interest among investors that pushed its share price higher by about three per cent in an otherwise lacklustre market.     

IndusInd Bank and state-run mining firm NMDC replaced IT major Wipro and diversified group Siemens on the 50-share benchmark index this morning.

While the NMDC shares failed to generate investor interest and its stock price fell by about two per cent to Rs 135, IndusInd Bank shares soared nearly three per cent to Rs 415.70 on the NSE.

Following their exit from Nifty, shares of Wipro and Siemens fell 1.9 per cent and 3.5 per cent, respectively. In a lacklustre overall market, Nifty closed 0.38 per cent up.     

An ‘Opening Bell’ ceremony was held at the NSE here to commemorate the inclusion of NMDC and IndusInd Bank in the Nifty.     

One of the first next-generation banks in the country, IndusInd Bank, received a banking licence along with eight other banks in 1994, when Manmohan Singh was the country’s finance minister.     

Of those nine banks, only five are left now and other four had to be merged with other banks due to reasons such as weak promoter base and financial problems.     

The Reserve Bank of India (RBI) is currently in the process of granting new banking licenses, when Manmohan Singh is serving as the country’s Prime Minister.     

Speaking to PTI after the ‘Opening Bell’ ceremony, IndusInd Bank promoter holding firm IndusInd International’s Director Ashok Hinduja said he welcomes competition and India is a huge market with enough place for more players.     

When asked how many new players he expected in the banking space, Hinduja said it was the prerogative of RBI on how many licences it wants to grant and therefore he would not be able to comment on that.     

In reply to another question on whether the conditions are tougher today for grant of licences, he said the conditions were indeed more stringent and difficult, as a result of which only a few entities might get the licence.

“However, I welcome competition. India is a huge market and there is huge potential in the country, especially in rural areas, for expansion of banking services. More competition would certainly bring better management practices and innovation for the benefit of the sector and the consumers,” Hinduja said.

IndusInd Bank was set up in 1994 by non-resident Indian (NRI) industrialist and Hinduja Group Chairman S P Hinduja along with hundreds of NRIs and other shareholders. Its promoter holding currently stands at about 15 per cent, in line with the RBI guidelines.     

“We will always abide by the RBI guidelines on promoter holding in a bank. However, our request to the RBI is that if the promoter group is strong in a bank, it fares better in times of slowdown. We have seen in the past that how banks had to be merged with others due to weak promoter bases,” he said.