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A report by Japanese brokerage firm Nomura said that more banks could now enter the AMC business after RBI approved IndusInd Bank to set up a separate AMC business. The report mentioned while this is positive for the banks, few challenges can come from the already competitive industry with 44 players.
This is the first instance in recent times that RBI has allowed an existing bank to set up an AMC business.
Until now, other banks acted only as distributors of mutual funds products. Nomura report says that this opens gate for smaller banks that have so far not set up such subsidiaries. Moreover, it remains to be seen if RBI will extend such relaxations for opening up other businesses like insurance, broking, wealth management etc.
In fact, RBI’s new private bank licence norms mention NOFHCs (Non-operative Financial Holding Company) as the ‘preferred structure’ for fresh licence applicants having other group businesses.
