Adding 'Spice' to the banking licence

BK Modi-promoted group registers company 10 days before the deadline

On June 21 when the Reserve Bank of India (RBI) said incomplete applications or those received after July 1 would not be considered for new bank licences, a new company got registered itself under the Companies Act, and exactly 10 days later, it was in the queue at the central bank headquarters in Mumbai for a bank licence.

S Mobility, which was formerly known as Spice Mobility, got the new company, Smart Global Ventures Pvt Ltd, registered with the Registrar of Companies on June 21. On Monday, Noida-based Smart Global Ventures applied for a banking licence along with 25 other aspirants.

Preeti Malhotra, currently executive director with S Mobility, registered Smart Global Ventures in her capacity as a non-executive director, according to documents reviewed by Business Standard.

Asked why they chose a different name to apply for the licence,  Malhotra said: “We want to instill the smart ways of banking by the usage of mobile banking technology and hence, we wanted to choose this name.”

She added the group, promoted by industrialist B K Modi, was hopeful of getting a licence as it had full “knowledge of smart banking”. “We fulfil all the fit-and-proper criteria and have a clear track record. We already provide mobile banking solutions to all the customers of State Bank of India.”  

However, according to a sector expert, who did not want to be named, the firm has no chance of getting banking licence as “they are not eligible at all as they have no reputation in the market”.

Interestingly, in a board of directors meeting held last Friday, the company had decided to shut two of its handset manufacturing units, both at Baddi, Himachal Pradesh. Also, the board had decided to transfer the mobile handset business to Spice Retail Ltd, a wholly-owned subsidiary of the company.

“The board believes the assembly/production will be unviable at the current low volumes and also due to fast changing technology”, said a company notification. However, Malhotra said this had nothing to do with its application for the banking licence.

RBI had received 26 new applications for banking licences on Monday. Of these, four firms - INMACS Management, Suryamani Finance, UAE Exchange and Financial Services and Smart Global Ventures - were among the surprise entries as little was known about them.