The engineering and construction giant in India, Larsen & Toubro (L&T) is planning to venture into the banking sector by applying for a banking license. The company plans to do so via its associate, L&T Finance in order to access cheaper funds and boost its presence in the area of infrastructure financing.
AM Naik, chairman, L & T said that though they are one of the top 3 NBFCs in the country, they still harbor ambitions to become a bank. He said, “We are going through the RBI’s discussion paper and would provide our feedback by September 30″.
He also added, “We also expect the government to come out with some policy decision by the end of December on companies planning to enter the banking space, after which we will apply for the licence. In the meantime, we will evaluate the trend, and also how L&T Finance should be restructured to make the best use of its banking licence”.
Naik said, “We are evaluating various options for unlocking the value of our financial unit, L&T Finance. Based on what comes out of the policy decision, we will either go for an IPO or a private equity participation”.
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