Atleast 8 NBFCs from the listed space like Bajaj Finance, Aditya Birla Capital, Shriram Transport, M&M Finance, L&T Finance, Cholamandalam, Indiabulls Housing, Muthoot Finance and 1 Tata Capital from unlisted space will be eligible to apply for banking license, under draft RBI guidelines released last Friday, as their loan book exceeds Rs. 50,000 crore. Will upping promoter cap from 15% to 26% be a good enough lure to satisfy personal promoter ambition of owning a bank for some of these corporates?
While on-tap banking licensing guidelines do exist as on date, how will these draft guidelines further RBI’s financial inclusion goals? In 2013, M&M Fin had explicitly decided not to bid for banking licence (when IDFC and Bandhan awarded licences) as satisfying SLR/ CRR requirements on a large loan base and opening 25% new branches in unbanked areas was not financially feasible. Even Bajaj Finance, as recent as April 2019, had denied interest in a bank, as interim financial pressure was visible when MFI-NBFCs such as Equitas and Ujjivan converted to small finance banks.
While NBFCs will still have to satisfy RBI on governance issues, concentration risk and conflict of interest, more pertinent question is how many of them will finally apply for a banking license once RBI actually doles out some of these carrots?