Banking buzz

No sooner had the finance minister announced that the Reserve Bank of India (RBI) will consider banking licences for applicants from private sector and non-banking finance companies (NBFCs), the market started speculating on probable candidates. The buzz was justified since the RBI will consider applications from private sector players for banking licences after a gap of 10 years. The last time RBI had issued banking licence to private players was in 2000, when Kotak Mahindra Bank and Yes Bank received regulatory nod. Currently, the Tatas, the Anil Ambani group, the Aditya Birla group, IDFC, Indiabulls, Edelweiss Capital, Religare, M&M, L&T, Shriram Finance and the Cholamandalam group are the ones which could join the race to set up banks, a source familiar with the development said. Of these, Reliance Capital that belongs to the ADA group, and AV Birla group have expressed their willingness to enter the lucrative banking space. The response from Religare, however, was guarded and the group is now in a ‘wait-and-watch’ mode till there is greater clarity on the issue. Earlier, top L&T officials had expressed their willingness to enter the banking space. Looking at the prospects in the banking sector, investors bought stocks of the probable applicants. Among those were Reliance Capital, which rallied over 8% and touched Rs 786. Shriram Transport gained nearly 7% to Rs 461, IDFC was up 4.7% to Rs 160 and Aditya Birla Nuvo, which holds most of AV Birla group’s financial services businesses, ended 4.3% higher at Rs 841.