UAE Exchange confident of getting bank licence

Mangalore Today News Network

Dubai, July 26, 2013: Dr. B.R. Shetty, one of the top Indian businessmen in the Gulf, applied for a banking licence in India, with a paid-up capital of Rs5 billion. The move comes as the country opens up key economic sectors for foreign investors, as well as non-resident Indian (NRI) community spread across the world.

Exuding confidence that it would get a banking licence in India, global forex remittance major UAE Exchange says it has already initiated work for an 800-branch network in the country and would focus mostly on rural areas.

Pitted against some of the biggest names of India Inc in seeking a bank licence, UAE Exchange’s Managing Director and CEO B R Shetty said that his competitors may be "very big", but his group was also not a small one and is serving one lakh customers a day globally.

Born in Udupi and a clinical pharmacist by education, Shetty first set up a healthcare business in the UAE in early 70s and later established UAE Exchange in 1980. Shetty’s contributions to the fields of trade and industry have not gone unnoticed back home in India. In 2009, the President of India awarded him one of the country’s highest civilian honours, the ‘Padma Shri’.

Abu Dhabi-based UAE Exchange a leading global player in the money remittance business. Indian-origin people across the world account for a significant part of its customer base.

The group has sought a banking licence in India through UAE Exchange India, a Non-Banking Financial Company registered with RBI. It is one of the 26 licence applicants, which include entities from groups headed by Anil Ambani, Kumar Mangalam Birla, Tatas etc.

 

"I know, there are some very big names with whom we are competing for the bank licence, but we have got very rich qualifications," Shetty told PTI in an interview here.

"We have 38 years of experience and customer loyalty across the world. Besides, we have withstood regulatory regime across the world, including the likes of US, UK,  Australia, China, Cananda, Hong Kong, Japan and India," he said.

Shetty said he is very much confident of getting a permit. "We have the pre-qualifications. We are already one step below the bank in India. We are fully compliant with RBI regulations for our existing operations," he added.

"There may be big names in fray, but we are also not small. We are also big enough. Our experience with RBI has been very good, we never faced any problems whenever we have sought any licence from RBI itself for our different businesses. We have always got those licences," Shetty said.

UAE Exchange India is a 14-year old company which started business operations in 1999 and the parent company operates in 30 different countries.

Asked about the RBI’s condition that the new banks would need to have at least 25% of their presence in rural and remote areas, Shetty said: ""As per the business plan submitted by us, our presence in rural areas would be much more than the threshold limit of 25%."

"Our focus has always been the common man, starting with the clinical services to remittance to banking now," he said. UAE Exchange has about 700 branches across the world, nearly half of which are in India.

"India is one of the largest recipients of the money transmitted through our network. Last year, we remitted USD seven billion (Rs 35,000 crore), which is almost 10% of the usd 65 billion global remittance that India received last year. India accounts for almost 60% of our global business that we handle," Shetty said.

"We have got very good exposure in terms of remittance to remote areas of the country. India itself recorded almost 30% growth in our remittance business last year. Banking permit would allow us the provide deposit services as well in these areas and then we would look to channelise deposits for lending to needy segments of the society," Shetty said.

"We would also be able to provide local employment through our banking network. At the same time, we would bring in latest technology to this business and offer services like ATMs, SMS banking, micro ATMs.

"We are not looking at banking as an altogether different experience. Rather, it would be a natural extension to the services being offered by us," he said.

Asked about the UAE Exchange’s India presence being mostly in the southern part of the country, Shetty said: "It is right that our focus has mostly been on the southern parts of the country. Out of 330 branches, 99 are in Kerala, but now we are planning to expand into other areas and some 700 branches are being opened in UP and Bihar within one year.

"Besides, we have already expanded into lending and other businesses. We are giving jewellery loans, mortgage, bill payments, travel agency etc. We are teaching the villagers to do cashless transactions, there would be micro ATMs with which you can pay bus fares, local market transactions.

"Forex remittance is our main business, but that does not mean we are not into other segments," he said, while adding any decision on brand change would be taken at a later stage.

Shetty also said the group’s India expansion plans were irrespective of the banking licence and he was also keen to expand into healthcare sector as well in the country.

The group’s NMC Healthcare is a listed company in the UK with a market cap of about USD 1 billion. It has healthcare centre and distribution business.

 

Asked about the targets, he said: "We are looking at about 800 (banking) branches in five years. Our India remittance business volume is about Rs 12,000 crore through 330 branches.

"The volumes would increase significantly if these 800 branches begin offering banking services as well. All our branches are integrated branches and the necessary infrastructure is already in place and would need to be only upgraded to offer banking business," he said.

Shetty, however, ruled out bringing in any strategic partners for the banking business. "Currently the promoter holding is about 63% and we plan to reduce it to 49%. The board has mandated E&Y to look for the investors and we would comply with the guidelines for 51% public holding. It could be a combination of preferential alottment, fresh issue, that we would decide soon.

"But, we do not plan to bring in any strategic partners, we do not need that. We have the resources and the expertise in place, at least for the next 5 years. We would internally generate whatever resources are required," he added.