Non-banking finance company Muthoot Finance is most likely not to tow the Mahindra Group’s line of withdrawing from the race to enter the mainstream banking sector.
“I see no reason why we should not enter the banking arena. We feel we are the most suited and qualified to become a bank,” George Alexander Muthoot, Managing Director, told Business Line over telephone.
The company, which has about 4,200 branches sprinkled across the country, will however take a final call on this by the week-end.
RBI has sought applications for new banking licences, for the first time in nine years, fixing July 1 as the deadline.
RBI norms
Mahindra Finance had caused a flutter in NBFC circles yesterday by announcing that it would not apply for a banking licence, citing that RBI norms are not conducive for large NBFCs to turn into banks.
It had particularly cited the norm that would make it mandatory for it to convert each of its 670-odd branches into banks within 18 months, stating that the guidelines “do not address the transitional issue when faced while converting a large NBFC like ours into a banking platform’’.
Muthoot said that RBI had provided adequate clarifications for conversion of an NBFC into a bank, keeping in mind its overall objective of financial inclusion and last-mile delivery.
“About 50 per cent of our branches are in tier II, III and IV cities. And many of them can be immediately converted into a bank. We see no transition issues, as we can stick to the 18-month deadline,” he said.