After failing to receive a banking licence in the process conducted this year, where the Reserve Bank of India granted in-principle approval to two entities to set up banks, L&T Finance Holdings is now looking to enter the sector through the inorganic route.
It is learnt that the non-banking financial company (NBFC) has approached the central bank to seek its prior approval to merge or acquire ING Vysya Bank.
A source privy to the development told The Indian Express that the NBFC is engaged in discussions with ING Vysya Bank. However, since the case involves an NBFC wanting to merge or acquire a bank, it needed to first seek RBI’s prior approval unlike the cases where full-fledged banks can announce the deal post acquisition of another lender and then move the regulator.
When contacted, a spokesperson of L&T Finance Holdings said, “The company does not comment on rumours and speculations.” Commenting on the same lines, an ING Vysya Bank’s spokesperson said, “As per our policy, we do not comment on market rumours or speculation.”
In the past, N Sivaraman, president and whole-time director at L&T Finance Holdings, had said that the company will be open for both organic and inorganic route to enter the banking business. Incidentally, L&T Finance Holdings that was hopeful of getting a banking licence in the four-year licensing process that concluded in April 2014, did not succeed in getting one.
The RBI gave in-principle approval to IDFC and Bandhan Financial Services to set up banks, leaving the other 24 applicants wanting for one.
The acquisition mode to enter a new business is not new to L&T Finance Holdings as the NBFC has gone ahead with several acquisitions to enter the mutual fund, home loan and car financing businesses. While L&T Finance had acquired DBS Cholamandalam AMC in 2009 to enter the mutual fund business, it acquired the Fidelity’s India MF business in 2012. The financing major also acquired Indo Pacific Housing Finance and Family Credit to enter the housing finance and auto loan business.
Meanwhile, ING Vysya Bank on October 28, 2014, announced that its MD and CEO, Shailendra Bhandari has resigned and the board accepted his letter of resignation.
The company also disclosed that it has identified Uday Sareen, deputy CEO and head of Wholesale Bank (subject to RBI’s approval) who will take over from Bhandari after he demits office on January 31, 2015.