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    What turning into banks will mean for NBFCs

    Synopsis

    NBFCs have to take a call on turning into banks depending upon the current expertise they have, says Umesh Revankar.

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    It is easier to start and build banks rather than to convert large NBFCs into banks, but can be achieved with RBI guidance and support, says Umesh Revankar, MD & CEO, Shriram Transport Finance.

    What is your view on the suggestions from the RBI committee that may pave the way for NBFCs to become full-fledged banks? How would it impact India’s NBFC industry?
    It is a very significant move considering that corporate owned or corporate operated NBFCs and also the other NBFCs of large size can convert themselves into banks and provide the entire range of services that banks give.

    Also maybe India needs more banks because the size of the country and economy is growing and we need more banks to come forward to give service to the customers. At the same time, each NBFC has to take a call depending upon the current expertise they have, the infrastructure that they have built, the management bandwidth and also the ability to cater to a wide range of services which banking as an industry provides.

    My feeling is that it is easier to start and build banks rather than to convert large NBFCs into banks. However, if RBI gives guidance and support, everything is possible and probably we can give more service to the customers in whatever bandwidth we have.

    How has demand recovered? Has it exceeded your expectations?
    The demand has recovered as per our expectation. I do not really think it has exceeded expectations. We always felt that the festival may not really create big demand but the following festival, the harvesting period will create a demand because we had a good kharif crop and a good rabi crop is expected and everyone in the rural and semi urban areas are waiting for the harvesting period in December and January. If there is more cash in rural India, if they are able to spend more, maybe more demand will be created and consumption can go up. So December-January is a very good period for the semi urban and rural market and harvest being good, it should make for much better demand in the coming two months.
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