The RBI has proposed on-tap bank licences in the private sector. Expressing his first reaction to Bloomberg TV India, SREI Infrastructure Finance Chairman and Managing Director Hemant Kanoria said the guidelines apparently seem to be good for many of the institutions, especially NBFCs, who are waiting to get a banking licence to expand their business and reduce their cost of funds.

What is the first sense you get out of the on-tap universal guidelines from RBI at this stage?

The guidelines apparently seem to be good because many of the institutions, especially NBFCs, are waiting to get a banking licence because it expands the way they do their business and reduces their cost of funds. So from that perspective I think that it is quite good because NBFCs and other institutions were all expecting, when we made an application a couple of years back, that they would also get a banking licence. So people were disappointed when they did not get the licence. Only two companies were given one. So I think this a chance for people who had missed the bus at that time. And RBI Governor has already mentioned that they will very quickly come up with the on-tap guidelines. This is going to be quite good. Only after we go through all the details of the guidelines we will be in a position to say if it is worthwhile for us to make an application or not. At first glance, it looks to be good.

Shareholders would like to know — is it something that you’d consider at this point or are you going to wait till the final guidelines because there are some changes on large conglomerates and capital requirements?

Apparently, it would make logical sense. But without going into the details it is very difficult to comment. But we would definitely evaluate whether we should apply or not.

Will capital be a constraint at all for SREI?

Financially we do not have any constraint. So I think that is the immediate part of it.

On the one hand, the guidelines make it very clear that large conglomerates are out of the bidding for universal bank licence. But they have added that entities and groups of private companies can apply if they own and control assets of ₹5,000 crore, which isn’t really all that small. There Do seems to be a little bit of contradiction…

I think these are only draft guidelines. I am sure the RBI has come out with these guidelines because they also want to get inputs from the industries and associations. I think once people give their inputs, they’ll be able to fine tune some of their thoughts because these are just thoughts which had got reflected in the draft guidelines. I am sure many people will be coming out with their views.

You have recently launched a ₹2,000 crore fund to invest in stressed assets. How do you see that progressing?

I think that there is good demand. But we have still not been able to get the investors on board because it was announced about a month back. We are in the process of talking to investors. We would mainly be investing in infrastructure assets and not in manufacturing or real estate because that is the skill set that we have been able to develop over the years. But to be very frank, we have not got substantial money coming in.

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