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Financial Services major Edelweiss has not given up on its plans to enter the banking sector. It may in next 3-4 years renew efforts for the banking foray, Rashesh Shah, Chairman & CEO, Edelweiss Group, has said.
Shah expects Edelweiss’ asset base to cross ₹ 50,000 crore in next 3-4 years and felt that achieving this milestone could be the right stage to set up a universal bank.
"There is no hurry. Our current asset base is ₹ 30,000 crore. Upto ₹ 50,000 crore, we don't have to be a bank. If we want to go above ₹ 50,000 crore then we may have to become bank. After 3-4 years, we will do it (achieve ₹ 50,000 crore asset base and set up bank)", Shah told Business Line here.
Edelweiss had not made the cut when the Reserve Bank of India (RBI) had previously invited applications for licensing of universal banks.
Shah — who had just returned from a US visit — highlighted that Indian banking industry is already going through an upheaval. The next 3-4 years could see technological changes bringing further transformation to the banking industry, he said.
"If in the next 3-4 years the RBI brings in concept of ‘on-tap’ licensing, then we would apply for bank licence at the appropriate stage (once asset base of ₹ 50,000 crore is achieved). Otherwise, we can apply for a licence only when RBI calls for fresh applications", Shah said.
Foreign interest
As for attractiveness of India as an investment destination, Shah said that foreign investors are more positive on India than even some of the Indian investors.
"The current year will be one of the highest foreign direct investment years. Our Government has done a good job. The earlier hostility that was there (against foreign investors due to tax disputes) has gone away", he said.
From FDI point of view, things have changed, Shah said, adding that people now believe stability has come back. "Earlier Government was hostile to FDI like Vodafone .This is a FDI friendly Government"
On portfolio flows, Shah said emerging markets on an overall basis were struggling although India was an exception. "Now, India is the best market among the emerging markets".
As for the likely impact of any rate hike by US Fed in December, Shah said that the Indian markets are prepared and this (likely event) has already been absorbed.
Stating that he was "very bullish" on India, Shah said that financial sector ends up doing well when interest rates are falling and inflation was under control.
"There may be noises in the short term but one thing I have learnt in eighteen years of Edelweiss is that don't ignore the short term noise. Pay attention to it. But don't focus only on that. Look at the long term trend which is very good (for India)".
China worry
On recent slowdown in China, Shah felt this would not affect India and would only benefit it.
"Now all foreign investors want a foot in India. With China delivering lesser than expected returns, most foreign investors say they want to invest in India. They don’t have a choice and cannot ignore India"
What is needed is that the procedures have to be further simplified and India must be an easy place to do business, Shah said, adding that the current Government was focused on this aspect.
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