Chennai: Standard Chartered Bank is setting up a wholly owned subsidiary, Standard Chartered Investments & Loans Ltd, a non-banking finance company (NBFC).
The NBFC, the second one to be set up by StanChart in India, will start with an equity capital of $7 million, to be scaled up to $50 million subsequently.
The NBFC is being set up with costing advantages in mind, says Christopher M Low, CEO (India region), Standard Chartered group. "It will raise corporate bonds and commercial papers in the market and transfer it to the bank. This should fetch better rates for the bank since NBFCs do not have to provide cash reserve ratio and statutory liquidity ratio on their borrowings unlike banks."
The NBFC will not raise retail deposits since this will attract statutory requirements but will disperse wholesale loans. In September 2003, the government had cleared the foreign direct investment proposal of the bank to set up a 100-per cent wholly owned NBFC in the country.