Exchanges eye banking presence

The stock exchange segment is looking for a presence in the banking industry.

Stock exchange officials said they had looked at the new draft rules for setting up of banks and considered the possibility of entering the segment. The discussion is at a preliminary stage as guidelines on new banks are yet to be finalised, according to two persons Stock Market Trading Tips

Last week Reserve Bank of India Governor Raghuram Rajanhad announced the bank would invite applications for small finance and payment banks in a few weeks. This led to a flurry of activity among companies.

“While it is all at a preliminary stage, it is definitely something which we have in mind. But nothing concrete has been decided yet,” said an exchange official Free Stock Share Tips

Another official said an exchange subsidiary may be a better candidate.

“The clearing corporation is well-capitalised and has a better profile. It may be a better candidate than the exchange itself,” said the person.

Spokespersons for the BSE, the National Stock Exchange and the MCX Stock Exchange declined to comment Intraday Trading Tips

But experts in the banking industry said it was unlikely exchanges would be permitted licences, given the central objective of the new banks was to promote financial inclusion.

The principal activity of a payment bank is to offer remittance services. They are excluded from engaging in lending activities and are expected to invest funds collected in government securities only.

Experts said that one of the main hurdles in achieving financial exclusion would be the limited reach of the exchanges Commodity Trading Tips

Besides, there are concerns that the exchanges are expected to use the banking channel for furthering their own commercial activities by replacing their existing banking channels with their own, if the exchanges are given the licenses, thereby reducing their own costs Nifty Trading Tips