Scotiabank to float finance firm in India

NEW DELHI, July 17: Scotiabank, among the largest banks in Canada, is setting up a non-banking finance company in the country. The bank wil...

NEW DELHI, July 17: Scotiabank, among the largest banks in Canada, is setting up a non-banking finance company in the country. The bank will bring in 75 per cent equity, while the rest come from its Indian partner. Sources say the proposal has already been cleared by the Foreign Investment Promotion Board (FIPB). The bank also plans to manage activities of mutual funds through a 100 per cent subsidiary of the proposed finance firm.

The new company is being set up with a minimum capital of $6.67 million (Rs 23.34 crore). The foreign promoter will bring in $5 million (Rs 17.5 crore) in the form of 175 lakh shares at Rs 10 each. The rest, Rs 58.45 lakh shares, will be subscribed by the Indian partner to bring in Rs 5.84 crore to take up the 25 per cent stake. The capital, however, may be increased in keeping with the business requirements.

The actual infusion of funds by the foreign promoter will be through subsidiaries and associates of the Scotiabank located in Bahamas, Mauritius or elsewhere. To be headquartered in Delhi, the finance firm will attempt to develop a broad customer base of deposits and take up activities like retail business including leasing/hire purchase, portfolio management services, investment advisory services, financial consultancy, debt syndication, debt and equity placement, custodial services and other fund-based and non-fund based activities.

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Established in 1832, Scotiabank is one of the largest banks in Canada. It is engaged in providing a wide range of banking and related financial services/products in Canada as well as international markets, either directly or through subsidiary and associated banks, trust companies and other financial arms. Outside Canada, Scotiabank has branches and offices in over 46 countries.

Scotiabank is at the moment carrying out its banking operations in the country through branches in New Delhi and Mumbai. It is planning to open another branch in Coimbatore shortly.

Scotiabank has identified India as one of the fastest-growing markets in the world, and the access granted to multinationals to enter sectors earlier reserved for public sector has created the need for large capital.

The finance firm will have to seek registration with the Securities and Exchange Board of India (Sebi) to start its activities. The proposed capital will allow the company to receive the highest category registration with Sebi.

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The company also plans to fund infrastructure projects and other industrial companies in the form of bankable guarantees