Remittance firm UAE Exchange pursues Indian bank licence

The remittances company UAE Exchange is competing to win a bank licence in India, as the country plans to issue its first new licences in the sector in more than a decade.

The UAE company's India division will compete with 25 other firms, all vying for the opportunity to tap a sector that is still relatively unexploited considering the country's vast population of more than 1.2 billion and its growing economic activity.

Only about four licences are expected to be awarded.

The deadline for applications closed on July 1.

India Post, Reliance Capital, L&T Finance, Aditya Birla Nuvo and Religare are among those seeking a licence.

India's central bank, the Reserve Bank of India (RBI), announced guidelines this year allowing corporate house and non-banking finance companies to apply for licences.

"We are certain that if given the licence, we would be able to start our banking operations effectively within the stipulated time of 18 months," said BR Shetty, the chairman of UAE Exchange India.

"We have been present in India since 1999 and we also have strong presence in all the countries, from where NRIs [non- resident Indians] send money to their families in India."

UAE Exchange India has a network of 328 branches and 44,000 agent locations across 20 states in India and handled a volume of 120 billion rupees (Dh7.4bn) during the financial year which ran until the end of March.

"Our rich infrastructure, technological prowess and wide reach across the nation are our strengths," said Mr Shetty.

The RBI has said that successful applicants will have to open at least a quarter of proposed branches in rural areas, as it aims to increase financial inclusion.

Only 35 per cent of Indians have bank accounts, according to a World Bank survey.

Indian banks have been hit by slower economic growth and high interest rates over the past year.

The country is grappling with a large current account deficit, a weak rupee and wider problems facing the global economy.

All this has contributed to an increase in the bad debt held by Indian banks, particularly the public sector institutions, as they have been affected by stalled infrastructure projects and weaknesses in some areas of the corporate sector.

business@thenational.ae