Likely takeover banking candidates buzz loud

RBI Governor Raghuram Rajan, in Washington, while addressing an event at the Institute of International Finance, said that RBI will, in the next few weeks, come out with major banking reforms to allow foreign banks to enter India in a ‘big way’. It is stated to be a big opening as it could even include takeover of Indian banks, with ‘small Indian banks’ finding a mention, in the governor’s address.

This statement has set the likely takeover candidates in the Indian banking sector buzzing aloud. Karnataka Bank, with no identifiable promoter and hence the perfect target, is up almost 10% at 103, with heavy volumes. Lakshmi Vilas Bank, another takeover probable, is up 9.4% at 71 per share. Kerala-focused South Indian Bank is trading higher by 7.6% at 21.20 per share while Dhanlaxmi Bank, struggling to revive its fortunes, is up nearly 7% at Rs. 45 per share. City Union, Karur Vysya and DCB are also up anywhere between 4-5%.

Earlier, it was only domestic suitors eyeing these small private sector lenders. If RBI permits foreign banks to enter India via this inorganic route, as hinted by Mr. Rajan, then the race to acquire them will only get more interesting.