General Electric's banking subsidiary in Hungary, Budapest Bank, is planning to approach the Reserve Bank of India for a banking licence.
Budapest Bank would formally apply for a licence in the next couple of months, sources close to the development said. GE owns 98 per cent stake in Budapest Bank.
The move is significant as the RBI is not comfortable with GE's plan to float a bank in India directly or by buying out an existing bank. Being a corporate entity, GE does not conform to the regulator's "fit and proper" criterion for ownership of banking operations in India.
The licensing norms do not permit a corporate to own more than 10 per cent equity in a private sector bank in India. GE had approached the RBI with a proposal to acquire a small private sector bank.
Banking sector analysts are closely watching the developments. "Since GE cannot enter the banking space directly, it is taking this route. It will be interesting to see the regulator's response (to it)," said an analyst.
Budapest Bank is a leading retail bank in Hungary offering mortgage, sales finance, auto finance, savings and investment services, and other traditional banking products.
GE has drawn up plans for expanding its retail banking operations in developing countries, including India, as it considers these markets as "underbanked". It is also looking at Russia, Malaysia and Indonesia.
GE Money Worldwide CEO and President David Nissen had said in March that his company was planning to roll out its retail banking operations in India within two years and soon start work on getting regulatory approvals.
GE has a string of banking subsidiaries in several countries across the globe, but not in the US and the UK. In Germany, GE Money Bank is a full service bank and one of the fastest growing financial services providers.
The company's other banking subsidiaries include GE Capital Bank France, and GE Money Bank in Austria, Czechoslovakia and Slovakia.
BANKING TROUBLE
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