Financial services major Edelweiss has not given up on its plans to enter the banking sector. It may in the next three to four years renew efforts for the banking foray, Rashesh Shah, Chairman and CEO, Edelweiss Group, said.
Shah expects Edelweiss’ asset base to cross ₹50,000 crore in the next three-four years. He felt that achieving this milestone cou ld be the right stage to set up a universal bank.
“There is no hurry. Our current asset base is ₹30,000 crore. Up to ₹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 a bank. After three-four years, we will do it (achieve ₹50,000 crore asset base and set up a bank),” Shah told BusinessLine .
Edelweiss had not made the cut when the Reserve Bank of India had invited applications for of universal bank licences.
Shah said that the Indian banking industry is already going through an upheaval. The next few years could see technological changes bring further transformation to the banking industry, he said.
“If in the next three-four years the RBI brings in the 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.
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 the FDI point of view, things have changed, Shah said, adding that people now believe stability has returned.
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 the financial sector ends up doing well when interest rates are falling and inflation is under control.
“There may be noises in the short term but one thing I have learnt in eighteen years with 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 the 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.