Tata Sons withdraws from new bank licence fray

Tata Sons has decided to withdraw its application for a new bank licence. . “Tata Sons Ltd. has withdrawn its application made on July 1, 2013 for a new bank licence. The company has indicated that its current financial services operating model best supports the needs of the Tata Group’s domestic and overseas strategy, and provides adequate operating flexibility to its companies, while securing the interests of the Group’s diverse stakeholder base. The Reserve Bank has accepted withdrawal of the application,” the RBI said in a statement.

Clarifying its stance, Tata Sons, in a statement, said: “The Tata group comprises over 1,000 companies engaged in multiple sectors and geographies, with a significant presence outside India. On a detailed evaluation of the ‘Guidelines for Licensing of New Banks in the Private Sector’ and analysis of clarifications thereto, Tata Sons has reached a conclusion that the group’s current financial services operating model best supports the current needs of the Tata group’s domestic and overseas strategy, and provides adequate operating flexibility to its companies, while securing the interests of the group’s diverse stakeholder base.”

The company said it remained committed to financial inclusion and believed that the group’s existing financial services footprint uniquely positioned it to provide technology excellence and access to India’s hinterland.

“The company shall continue to monitor developments in this space with great interest and looks forward to participating in the banking sector at an appropriate time,” the statement added.

As on July 1, 2013, the RBI had received 26 applications from major corporates, NBFCs, government entities and microfinance companies to open commercial banks in line with the RBI’s new guidelines for Licensing of New Banks in the Private Sector announced on February 22, 2013.

On September 6, 2013, RBI communicated that Value Industries Ltd. (Videocon) had withdrawn its application. In its place, the application of K. C. Land & Finance Ltd., which was not included in the list of applicants released orginally, was included.

Prominent players in the fray include Aditya Birla Nuvo, Bajaj Finserve, L&T Finance, IDFC, Reliance Capital, Shriram Capital, LIC Housing Finance, Department of Post, IndiaBulls and Edelweiss. The new licences are likely to be awarded early next year.