PGFIL asks RBI to allow RNBC biz a little longer

The Peerless General Finance & Investment Company (PGFIL), has sought a special dispensation from the Reserve Bank of India (RBI) to continue with its residuary non-banking company (RNBC) deposit-taking business for some time more. The erstwhile largest RNBC in the country had to move away from its traditional business of deposit mobilisation because of directives from the regulatory authorities and move into an alternative business-financial products distribution (FPD) business, leveraging its distribution network. This was disclosed by S K Roy, MD, PGFIL, while interacting with the media soon after the 78th annual general meeting of the company. “ RBI has the authority to grant us this dispensation and if it does, the process of business remodelling will be considerably smoothened,” said Roy. The company has suffered a setback in the FPD business due to changes in Insurance Regulatory and Development Authority (Irda) regulations that necessitated evolving a new model of distribution. The new model also requires reworking of workflows, IT systems and training. This in turn, is a time-consuming process, and as a result, there was a considerable slowdown in the growth of FPD business in the second half of the year. Roy said, “The first year premium for the past year as a whole declined from Rs 144 crore to Rs 133 crore. This is notwithstanding the fact that in this new business, the Peerless group has, over the past four years, collected more than Rs 1,200 crore by way of first year and renewal premium, starting on a zero base.”

Financial Chronicle