The long standing dream of opening a bank under the Tata banner was sacrificed for the larger good under the leadership of Cyrus Mistry.
It is not usual business for India’s central bank to grant new banking licences. After years of contemplation, the Reserve Bank of India (RBI) had finally opened the floodgates to corporate houses in 2013. The final guidelines for new bank licences in February were issued by RBI and the last date for application was July 1. Tata Sons, along with 25 other banking hopefuls submitted their applications to RBI. This was, however, about a month after RBI issued clarifications on the final norms. The RBI had received 443 queries from 34 individuals and organizations.
“The clarifications came very close to the deadline of applications. While Tata Sons submitted the application on July 1, they wanted to run a check with all other group companies to be sure about the banking model,” said an industry expert. Above 60% of the group’s business came from overseas and there were times when the operating companies need to provide financing solutions to their customers. “Since all financing companies in the group need to be under the NOFHC, or Non-Operative Financial Holding Company, there could be situations wherein a given country is not a priority for the proposed bank or NOFHC but extremely important for an operating company,” said Tata’s in a statement.
As a result, the application was pulled back in November, almost five months after the submission deadline. However, the back door has been kept open.