Reliance Capital as a National Bank

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Information about Reliance Capital as a National Bank

Published on March 4, 2014

Author: RohitMall1



Proposing Reliance Capital as a National Bank for a management fest in CMS Bangalore (Precipice).
The SWOT, future, adhering to the RBI guidelines etc

GoI 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 2003-04 157 commercial banks [26 public sector banks, 20 private sector banks, 43 foreign banks, 64 RRBs and 4 LABs] as on March 31, 2013

• (Then) Finance Minister Pranab Mukherjee announces the need for new banks Feb 2011 • RBI issues final guidelines for licensing of new Private Sector Banks Feb 2013 • RBI announces list of 26 companies that apply for banking license, starts reviewing candidates July 2013

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. – 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

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

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


One of the Largest Customer Base Ability to Act as a Guarantor Vast Experience in Indian Financial Market Existing Infrastructure

Significantly 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

India‘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

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

Agri/Weather Advisory Customized Loans Online B2B Platform Business Correspondents

Savings • 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

Eligible Promoters ―Fit & Proper‖ Corporate Structure NBFCs and entities in the public and private sectors are eligible to set up a bank through an NOFHC Applicants should have sound credentials and a 10-year track record of running their business successfully. The NOFHC should be wholly owned by applicants.

Minimum Equity Cap Foreign Shareholding Corporate Governance INR 500 crores to be put up by applicants. Bank to list itself within three years from start of operations. Not to exceed 49% for the first five years of commencement of business. At least 50% of directors should be independent directors.

Exposure Norms Rural Banking & PSL 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. Bank to open at least 25% of its branches in unbanked rural centres, and also comply with PSL targets and sub-targets.

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.

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