All finance company shares are up and in the sky. With p/e ratios in the 30s and even in the 90s.
Let us ask ourselves some basic questions.
What will really happen if Tata, Birla, LnT, Shriram group, Religare, Indiainfoline and a couple of others do get a banking license?
To start off, there will be a scramble for people – from the existing banks. So those people especially those in their late 40s will benefit. The places from where they will be picked are of course the PSU banks, and the existing private sector banks like ICICI, HDFC, Kotak…..so they will be the first beneficiaries (i mean the employees!). This will also cause the salaries to go up, as well as improve the level of service that one gets from the older banks.
All these banks will open zillion of branches, set up ATMs – so the real estate prices will go up. If you are a landlord, rejoice.
Many jobs at the entry level will be created – especially at the marketing end.
People MAY move their accounts to the new banks, and thus improve the ratios in the older banks…
Will the shareholder benefit?
I know not.
There is only – one and only – company which has made a good impression on the shareholder. This group has a fantastic shareholder treatment and is thus a big wealth creator….
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