Tata Group may abandon plans to enter banking

The Tata Group is understood to have done a rethink on its banking business plans and may now not go ahead with it, said executives close to the development.

The group had considered getting into banking through Tata Capital, its financial services arm, after a working group of the Reserve Bank of India (RBI) in November 2020 recommended granting banking licences to industrial houses. However, the executives said the restrictions and regulations that come with a banking licence would lead to operational issues for the conglomerate and also the costs would far outweigh the benefits of having a bank as part of the group.

Since the rules for non-banking financial companies (NBFCs) and banks are also converging, there is still an advantage in being a standalone finance company, as the operational costs for banks are much higher, they said.