Tata Sons, the Tata Group holding company, on Wednesday withdrew its application for a banking licence.

This is the second industrial group after Videocon-promoted Value Industries to opt out of the race that now has 25 in the fray.

The Tata move comes just two months before the final licences for new banks are to be issued by the RBI.

RBI norms

For Tata Sons, the constraining factor was the RBI guideline for new bank licences that required all financial services entities in a group to be necessarily owned by the non-operating financial holding company (NOFHC). To comply, the Tatas would have had to re-organise the existing financial services structure of the Group.

According to a Tata Sons spokesperson, “Tata Sons has reached a conclusion that the group’s current financial services operating model best supports the current needs of the Tata group’s domestic and overseas strategy, and provides adequate operating flexibility to its companies, while securing the interests of the group’s diverse stakeholder base.”

In a statement, Tata Sons said: “The company looks forward to participating in the banking sector at an appropriate time.”

After the RBI issued clarifications in June on the new bank licensing policy, Tata Sons had a three-week window (till July 1) to identify all issues and put in place concrete solutions.

“Given that we have 1,000 plus companies in the group, it was impossible to complete a detailed assessment, seek the requisite approvals from various affected Tata companies prior to filing of our application,” the spokesperson said.

Beena.parmar@thehindu.co.in

(This article was published on November 27, 2013)
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