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Paul Noronha

Strategic partnership: Mr M. V. Nair (right), CMD, Union Bank of India, and Mr Rashesh Shah, Chairman, Edelweiss Group, at a press conference in Mumbai on Friday.–

Our Bureau

Mumbai, Sept 12 Edelweiss Capital will soon file an application with the regulators for its Asset Reconstruction Company (ARC) licence, said a company official on Friday.

“We will apply for the regulatory approval in the next six months. We will be holding up to 49 per cent and are in the process of rounding up partners for the business. There would be around four to six partners in this venture and would have both domestic and Indian partners,” said Mr Rashesh Shah, Chairman, Edelweiss Group.

He also added that the team for the business had been finalised and a board appointed for the same.

The task of an ARC would be to buy out the bad debts of banks and other financial institutions and try to recover the loans and at the same time compensate the lenders for the assets taken over.

In its recent report, CRISIL stated that it expects the gross non-performing assets (NPAs) in retail loans to increase to around 4 per cent by March 2009, from 2.7 per cent as on March 31, 2007.

Mr Shah said that the business would be floated with a paid- up capital of Rs 100 crore. He also said that the company would look at both large corporates and SMEs as their target group.

Others in this space include ASREC (India), ARCIL (promoted by ICICI Bank, SBI and IDBI), Dhir & Dhir, International Asset Reconstruction Company and Pegasus Asset Reconstruction Company and ACE (an IFCI-promoted company).

Kotak Mahindra Bank and Punjab National Bank have already obtained their licences from the RBI.

The group also announced its tie up with Union Bank of India to offer wealth management services to the bank’s High Networth (HNI) clients. The bank would identify customers with a bank balance of more than Rs 10 lakh and who are willing to invest the said amount.

These clients would then be referred to Edelweiss Securities. The service, which was launched last month, has covered 230 clients till now, of the targeted 500 HNIs, said Mr M.V. Nair, Chairman and Managing Director, Union bank of India. The eligibility amount would be gradually reduced from Rs 10 lakh, Mr Nair added. Of the total 25,000 customers identified by the bank, 6,300 customers are from Mumbai.

The bank will provide the wealth management services in four centres — Mumbai, Pune, Ahmedabad and Kolkata. The bank had earlier announced a tie-up with Wealth Advisors (India) Pvt Ltd to offer wealth advisory services in the four centres of Delhi, Bangalore, Chennai and Hyderabad.

“The venture will only provide advisory services to the bank’s clients. The focus will be mainly on India-centric funds, but we will definitely look at international funds as well. It will not be just capital markets oriented funds but we will be looking at structured products, portfolio management, art, real estate, commodities etc”, said Mr Shah.

Mr Nair also said that the bank will focus on its credit card business from the next fiscal. “There is a need to revamp the back-end and marketing processes and a need to work out the strategy”, he added.

More Stories on : Non-Performing Assets | Financial Services

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