Chennai, May 28 (IANS) City-based Sundaram Finance group Friday ruled out entering the banking sector and said it will continue with the mutual fund business with or without a partner.
‘Converting Sundaram Finance Ltd into a bank provides no advantage. At this level Sundaram Finance can compete with many private banks,’ Managing Director T.T. Srinivasaraghavan told reporters here.
‘We will be in mutual fund business with or without a partner.’
Asked about market rumours that the group is exiting its non-life insurance joint venture, Royal Sundaram Alliance Company, he said: ‘In respect of the insurance, the situation has not arisen for us to take a final call’.
Sundaram Finance has two joint ventures – mutual fund and home finance – with BNP Paribas.
The mutual fund joint venture is under spotlight as BNP Paribas acquired Fortis business outside the Netherlands.
As per Indian regulations, no one can have two mutual fund companies and as such BNP Paribas has to decide between Fortis Mutual Fund and Sundaram BNP Paribas Asset Management Company.
‘There are three options for us – buy out BNP Paribas’ stakes in the mutual fund business; merge Fortis Mutual Fund with us or selling out our stakes in the mutual fund business. The last one does not arise,’ Srinivasaraghavan told IANS.
Asked whether Sundaram Finance will be open to buying out BNP Paribas’ stakes in both the joint ventures and run the business independently, he said: ‘There is no issue with the home finance venture. The partnership with BNP Paribas has been good till now. But we are committed to mutual fund business.’
He said discussions are on and in a month’s time a final decision will be taken.
About the rumours that Royal Sundaram Alliance is on the block, he said: ‘We have not spoken to anybody about selling our stakes. I can’t say that about our partner – RSA, UK. A stage has not been reached where we have to take a call to be present or exit the insurance business.’
Meanwhile, Sundaram Finance, a player in the commercial vehicle and car finance segments, closed fiscal 2009-10 with a revenue of Rs.1,181 crore and net profit of Rs.226 crore.
The company board has recommended a final dividend of 40 percent.