Reliance Capital as a National Bank
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Transcript of Reliance Capital as a National Bank
RELIANCE Capital As a Proposed
Bank
PRESENTED BY:ROHIT MALLADITYA PRASADTEAM LOS ANGELES
BANKING LICENCE - BACKGROUNDGoI nationalized 14 major commercial banks in 1969
In 1980, 6 more banks with deposits of Rs.2 billion or more
were nationalized
Licence issued to 10 private banks in 1993-94, 2 other banks
awarded license in 2003-04157 commercial banks [26 public
sector banks, 20 private sector banks, 43 foreign banks, 64 RRBs and 4 LABs]
as on March 31, 2013
BANKING LICENCE - BACKGROUNDFeb 2011
• (Then) Finance Minister Pranab Mukherjee announces the need for new banks
Feb 2013
• RBI issues final guidelines for licensing of new Private Sector Banks
July
2013
• RBI announces list of 26 companies that apply for banking license, starts reviewing candidates
BANKING LICENCE – WHY?
Financial Inclusion
Wider Reach of Financial Services
Mobilize Savings & Induce Growth
Inject Healthy Competition
“Average Population per Bank Branch” (APBB) for rural and semi—urban areas fell from 17,200 in 2005 to 12,100 in 2013. The APBB is likely to continue to decline as the number of branches increases. –financialservices.gov.in
Only 40 per cent of Indian adults had access to formal bank account and just 8 per cent borrowed formally in the last 12 months. -World Bank Global Findex Survey
India’s six largest cities have 11% of the total bank branches. -CRISIL
Number of savings bank accounts is close to four times the number of loan accounts. -CRISIL
BANKING LICENCE – WHY?
GROUP PROFILE
Among India’s top three private sector business houses on all major financial parameters
Assets in excess of Rs.180,000 crore and net worth to the tune of Rs.89,000 crore
Customer base of over 100 million, the largest in India
Business presence that extends to over 20,000 towns and 4.5 lakhs villages in India
COMPANY PROFILE
India's leading and amongst most valuable financial services companies in the private sector
Net worth of Rs. 12,373 crore and total assets of Rs. 41,721 crore
Highest credit quality rating assigned by ICRA, CRISIL and CARE
Experience and credibility of over two decades in the industry
BankBank That Reaches To The Masses
THE UNIQUENESS
One of the Largest Customer Base
Ability to Act as a Guarantor
Vast Experience in Indian Financial Market
Existing Infrastructure
BRANCHLESS BANKINGSignificantly lower cost of coverage
On-demand access to financial services
Initial investment is negligible as compared to ‘brick & mortar’ structure
Branchless Banking reduces cost of transaction by 75%
Wireless Access Points
Mobile Vans
Container Model for
Kiosks
SOME MEDIUMS
RELIANCE COMMUNICATIONIndia’s 2nd largest telecom operator
123 million wireless customer base representing 14.17% of the market
31 million rural subscribers covering 24% of the market
Covering 24,000 towns and 6,00,000 villages
50,000 multi-tenancy towers having capacity of 200,000 slots and 190,000 route km of optical fibre network in India
R-CLOUD
Virtual Private Network
Contains entire database of customer information and financial transaction
Enables a virtual presence and Wireless Access
Firewalled and Encrypted to protect sensitive data
VALUE ADDED SERVICES
Agri/Weather Advisory
Customized Loans
Business Correspond
ents
Online B2B Platform
REVENUE GENERATIONSavings• Mobilization of savings• Minimum fixed deposit in ballpark of
Rs.1200-1600• Lucrative Interest rate of 4-6% per annum
on savings to attract maximum deposits. • Money either circulated back into rural
market in forms of loans or invested elsewhere.
Loans• Micro and semi-micro loans offered to
customers (Rs.5000 and above)• High interest rates of 23-26% will be
charged on long term loans to cover high risk of lending to rural client
• Working Capital loans of Rs.1000 upto Rs.5000 offered with interest rate of 35-45% PA. Repayment period 1-7 days
RBI – GUIDELINES COMPLIANCE
NBFCs and entities in the
public and private
sectors are eligible to set
up a bank through an
NOFHC
Eligible Promoters
Applicants should have
sound credentials
and a 10-year track record of running their
business successfully.
“Fit & Proper”
The NOFHC should be
wholly owned by applicants.
Corporate Structure
RBI – GUIDELINES COMPLIANCE
INR 500 crores to be put up
by applicants. Bank to list itself within three years from start of operations.
Minimum Equity Cap
Not to exceed 49% for the
first five years of
commencement of business.
Foreign Shareholding
At least 50% of
directors should be
independent directors.
Corporate Governance
RBI – GUIDELINES COMPLIANCE
NOFHC and the bank will have no exposure to the promoter group. The bank cannot invest in capital instruments of
financial entities held by the
NOFHC.
Exposure Norms
Bank to open at least 25% of its
branches in unbanked rural
centres, and also comply with PSL targets and sub-
targets.
Rural Banking & PSL
While maintaining the standard banking model and offering quality services in developed and urban areas, Reliance looks to pioneer rural banking and tap into the massive 60% un-served percentage of our national population by revolutionizing the way banking is offered. Branchless and virtual banking are the biggest enabler and by pushing for adoption through incentives offered in it’s value added services, Reliance is certain of success in bringing quality financial services to the entire nation.
CLOSING THOUGHTS
THANK YOU!