Bajaj Group keen in venturing into banking space

Like other big industrial houses, the Bajaj Group is interested in venturing into banking but there are some hurdles in the way as the regulator is not interested in issuing new banking licenses to large industrial houses. On the other hand Rahul Bajaj, chairman of Bajaj Finserv and Bajaj Auto Finance, is optimistic about getting licenses.

The Reserve Bank of India will be releasing draft of guidelines on the issue of new banking licenses to corporate thus company’s entry will depend on these guidelines.

The Delhi government has not put any restrictions on giving banking licenses to private corporate groups and NBFCs and is open to reconsider the norms. But, RBI is not interested in allowing industrial houses to enter into banking space.

The shareholders of Bajaj Auto Finance and Bajaj Finserv are quite interested in entry of group into banking. Bajaj told shareholders of Bajaj Finserv and Bajaj Auto Finance, “We are in principle interested in getting into banking.”

Bajaj said, denying industrial houses banking licenses is not justified, instead the groups should be given license as they had the track record, financial standing and the net worth needed however, RBI can put restrictions on loans and investments to the group companies as safeguards. He suggested, “Give it to the good guys and not those who will run away with the depositor’s money.” He said, “We can’t go back to the old policies in this age and time.”

Bajaj accredited that RBI steered the economy well in difficult times, managed interest rates and liquidity well but he disagreed on the issue of not allowing the large industrial houses into banking.

Either Bajaj Finserv or its subsidiary, Bajaj Finance, which will be used to get into banking, will be depending on their eligibility criteria. He said, “We intend to do it as a new company. It will need capital of Rs 500 to Rs 1,000 crore and BFL will not be able to do it, so it could be Bajaj Finserv.”