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L&T’s financial arm is planning to enter the banking industry by setting up a commercial bank to expand its scope in the financial services provided for India.
Currently 4.69% stake of the City Union Bank is held by L&T Finance. According to the spokesperson of the company, setting up a bank will provide additional benefits while offering services for the corporate partners.
L&T currently own the non-banking finance company, L&T Infrastructure Finance and L&T General Insurance.
"Our long-term vision is to be present in the entire gamut of financial services including asset management, general and life insurance and bank. Our vision is to be a wholesome financial services player but no time frame has been fixed to achieve that," said N. Sivaraman, the L&T executive vice president for financial services.
According to Sivaraman, the company has not finalized on whether to enter into partnership or to go for acquisition or to start a new bank from scratch.
"We don't find a need for a foreign partner for funds. For assessment of risks, it is actually based on local experience. A foreign partner brings in expertise in pricing of the risk. We can do that on our own," Sivaraman said.
About floating a bank, Sivaraman said: "There are relative advantages of having an NBFC and a bank."
"There are two agendas for holding a stake in a bank. The first one is to have a share in the business. The second is the availability of banking services to our trade partners in opening letters of credit and other banking products."
L&T Finance has plans to issue non-convertible debentures for raising about Rs.1,000 crore.
