Shriram Capital, which manages more than Rs90,000 crore through its various financial services companies, is one of the largest non banking companies in India. Two years back, it had applied for a banking licence but was not able to make the cut.
However, as GS Sundarajan, wholetime director, Shriram Capital says, it still harbours hopes to have its own bank one day.
“We have always been keen to get onto the banking platform, but there has been a big misalignment between the regulator (Reserve Bank of India) and us in terms of need to convert existing businesses into the bank on day one, which we don’t believe we can do. We will look for acquisitions but we need to resolve the differences with RBI and the finance ministry,” says GS Sundarajan, wholetime director, Shriram Capital.
The 41-year-old NBFC had initially decided to apply for a small finance bank licence this year but had then backed out later.
In this conversation with VCCircle, he says while new banks such as IDFC and Bandhan, which got RBI's nod to start their banks, will disrupt traditional banking channels, traditional banks cannot be written off as the country will need a mix of traditional and digital banking.
At the same time, Sundarajan says he is not a great supporter of payments banks as their revenue model eludes him. In August, RBI had given gave in-principle approval to 11 entities to set up payments banks.
Talking about the performance of the government and the current deadlock in Rajya Sabha, he believes that “it's karma for BJP” and the disruptions were expected given what the BJP had done when it was sitting in the opposition earlier.
Sundarajan also discusses the evolution of private equity and venture capital in the country and believes that the government norms to allow foreign investment in AIFs (alternative investment funds) shall prop up valuations in the medium term while the market for IPOs will provide for easier exits in the coming months.