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Videocon to enter banking sector

Mumbai, Mar 3 () : Videocon which is a major player in electronics industry will apply for the new bank licenses given by RBI. The company’s Chairman Venugopal Dhoot said that he has set apart Rs 1000 crore for this and will have a foreign partner.

RBI issuing guidelines for banking stipulated that the applying firm should have a clear track of operations for ten years and should set up Rs 500 crore as corpus fund. It should however not loan funds for companies linked with the bank promoter. Videocon Industries has the right credentials.

Videocon has exposure to the financial markets with its joint venture with Liberty Mutual Insurance, Videocon Chairman Venugopal Dhoot told a news agency. Dhoot said that his company was instrumental in bringing electronic giants like Panasonic and Toshiba to India and hence was no stranger to doing business with banks abroad.

Dhoot felt that the business lay in the rural and semi urban areas. RBI had stipulated that 25% of the bank branches should be located in towns with less than 10,000 population.

The company has pan India presence and the brand is known in rural and semi-urban areas. Apart from exploiting it, the company has 500 offices across India at present which will be used that will be a leverage as they enter the banking sector.

Videocon was in talks with an American Bank as minority partner and as per RBI norms within three years, it can dilute the stake to 15%. The Liberty Videocon General Insurance Co Ltd which received IRDA clearance is a 74:26 JV.

New banking licenses have to be applied before July 1. After getting permission, the bank has one year to start operations. Within three years, it has to be listed in the stock market after which the Indian promoter who holds 51 % can dilute it through public offering to 15%. The new banking sector has L&T, Mahindra, Tata,Shriram group and the Pai’s.