Banking focus to be on priority sector: Shriram Capital
Mar 03 2013 , Mumbai
"Our bank will be a 100 per cent PSL bank," Duggal told PTI in an interview after the Reserve Bank announced the final guidelines for new round of private bank licences on February 22.
The PSL norms, which require lending of up to 40 per cent of advances to disadvantaged sections of the society which include small businesses, are found cumbersome by many players, especially by private banks.
According to the guidelines, the new banks will also have to comply with the norms from day one and must also have 25 per cent of branches in the un-banked areas.
Duggal asserted that Shriram Capital, which has its origins in the not-so-appreciated chit funds, but made it big as an asset-financier -- meets all the necessary requirements and will soon be applying for a licence.
Its truck financing arm Shriram Transport Finance is the largest in the sector today.
"We are fine with all the requirements and there is nothing discomforting. We would like to have some clarity on certain clauses, though," he said, but declined to identify the doubts, saying a dedicated team within the group is working on it.
Funding for the bank, both the mandatory capital of requirement of Rs 500 crore and working capital, is not an issue, Duggal said, adding the group has allocated the necessary resources.
The then Finance Minister Pranab Mukherjee had first announced granting more banking licenses in the budget of 2010 which help deepen the financial inclusion agenda.
Duggal said the group has been studying the space for two years, anticipating an entry into the space, and is particularly impressed with the models of two banks -- South Africa's Capitec and Indonesian Bank BTPN.
Capitec's website says the bank operates with simplicity, affordability, accessibility and personal service as its key pillars, while BTPN says there is business sense in making a difference in the society and one does not need to do CSR for this.
Duggal said there is "tremendous opportunity" in serving small businesses which is untapped by the present day banks due to being too costly.
"We have our model ready and I feel our only competition will come from the moneylenders," he said, stressing that the model involves having the agility and flexibility of the moneylenders who operate seven days a week, have convenient banking hours, know their customers very well.