Videocon to enter banking, earmarks Rs 1,000 crore
New Delhi: With RBI issuing guidelines for new bank licences, diversified group Videocon Industries Sunday said it will enter the banking sector with a foreign partner and has earmarked Rs 1,000 crore for the purpose.
"Already, we have entered the financial sector through our joint venture with Liberty Mutual Insurance. Now that the guidelines for new banking licence have come, Videocon will definitely apply for it," Videocon Industries Chairman Venugopal Dhoot said.
He said the company meets the criteria set by Reserve Bank of India (RBI) for the new banking licence and would use its experience of collaborations with foreign partners.
"We have the credentials and track record of more than 10 years. We are the one who brought the likes of Toshiba, Panasonic and others to India. So, we have the experience and expertise for collaborations with foreign partners," he said.
When asked how much fund Videocon has earmarked for the planned foray into banking, Dhoot said: "The minimum requirement as per RBI is Rs 500 crore but we have set aside Rs 1,000 crore. There is a big market in rural and semi-urban areas."
Although the company will also focus on urban areas, he said: "The Videocon brand has a strong equity in rural and semi-urban areas. We intend to exploit that. Moreover, we have over 500 offices across India at present and we will leverage on that as and when we enter the banking sector."
When asked if the firm would foray into banking on its own, he said: "No. We are talking to an American bank now. Our idea is to start with us as majority partner and then dilute stake to public to meet regulatory norms in future."
Videocon had formed a 74:26 joint venture -- Liberty Videocon General Insurance Co. Ltd -- with Liberty Mutual Insurance in India. The JV had received licence to carry on general insurance business from Insurance Regulatory Development Authority (IRDA) in May 2012.
Last month RBI had issued the much-awaited guidelines for new bank licences, allowing corporates and public sector entities with sound credentials and a minimum track record of 10 years to enter the banking business.
As per the guidelines, the minimum paid-up capital for setting up a bank has been pegged at Rs 500 crore. The cap on the foreign investment, including FDI/FII and NRI, has been set at 49 percent.
On receipt of licence, a promoter has to start operations within one year and list the company within three years of commencement of the business. Also, the new banks should open at least 25 percent of branches in unbanked rural centres.
Those seeking to set up a bank would have to submit applications by July 1, 2013.