Tata Sons, the holding company of the Tata Group, Wednesday said it has withdrawn its application to set up a bank, saying its current financial services model best serves the needs of the group’s domestic and overseas businesses.
Following the withdrawal by Tata Sons, 25 applicants, including the Anil Ambani Group and the Aditya Birla Group, remain in the race for new bank licences.
Tata Sons is the second large business house to withdraw its application. Venugopal Dhoot’s Videocon had pulled out a couple of months ago.
Mahindra & Mahindra, which initially showed interest in entering the banking sector, did not apply for a licence, citing “disadvantageous” and unclear norms.
“The company (Tata Sons) 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 of India said in a statement.
The RBI has accepted the withdrawal of the application, it said.
The Tata Group said in a separate statement that it had written to the RBI yesterday, withdrawing its July 1 application for a new bank licence.
“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,” it said.
After the RBI called for applications for new bank licences, 26 entities had applied by the last date of July 1.
Finance Minister P Chidambaram had earlier this month said he hoped the RBI would announce a shortlist for the banking licences in January.
Tata Sons said it decided to withdraw its application from the current round of licensing after prolonged deliberations and detailed analysis.
The Tata Group comprises of over 1,000 companies engaged in diverse sectors and geographies, with a significant presence outside India, according to the release.
It said Tata Sons remains committed to financial inclusion and believes its existing financial services footprint uniquely positions it to provide technology excellence and access to India’s hinterland.
The RBI had placed a list of 26 applicants for new bank licences in the private sector on its website on July 1. The central bank intimated two changes in the names of applicants on September 6.
The list of the remaining 25 players in the fray include Aditya Birla Nuvo, LIC Housing Finance, the Department of Posts, Reliance Capital, Bajaj Finserv, Bandhan Financial and Edelweiss Financial Services.
Among others are IDFC, IFCI, Indiabulls Housing Finance, India Infoline, INMACS Management Services, Janalakshmi Financial Services, J M Financial, L&T Finance Holdings, Magma Fincorp, Muthoot Finance, Religare Enterprises, Shriram Capital and Smart Global Ventures.
SREI Infrastructure Finance, Suryamani Financing Company, Tourism Finance Corporation of India, UAE Exchange & Financial Services and K C Land & Finance are also in the race.
The RBI had issued guidelines for licensing of new banks in the private sector on February 22 and issued clarifications in the first week of June this year.
In the past 20 years, the RBI has given licence to 12 banks in the private sector in two phases. Ten banks were given licences on the basis of guidelines issued in January 1993.
The norms were revised in January 2001 based on the experience gained from the functioning of banks and fresh applications were invited. Kotak Mahindra Bank and Yes Bank were the last two entities to get banking licences from the RBI in 2003-04.
PTI