The two state-run banks Union Bank and IDBI Bank are planning to expand their operations therefore they are venturing into asset management business and for this they have applied for the approval from market regulator SEBI.
IDBI Bank had applied for license in January this year while Union Bank of India submitted its application with the regulator in February.
According to official sources all these proposals are in the final stage of clearance.
The banks are expected to get license in the course of year and after getting the approval they can start asset management informed sources.
On the other hand Axis Bank country’s third largest private sector lender has already received the approval from the regulator to start asset management business.
The Union Bank of India will be setting up an asset management firm with KBC Group of Belgium. In this joint venture the Union Bank will own 51 per cent stake and is expected to start operations in the current fiscal.
However the IDBI Bank has got the broad approval for the setting up of the asset management company either as a wholly-owned subsidiary or as a joint venture.
At present there are five mutual funds including Baroda Pioneer Mutual Fund, Canara Robeco Mutual Fund, ICICI Prudential Mutual Fund, Principal Mutual Fund and SBI Mutual Fund either fully or partly owned by Indian banks in the partnership with foreign companies.
By the end of July the combined average AUM of the 30 fund houses amounted to Rs 5,38,736.43 crore, the monthly AUM figures of many fund houses were not available.
Last month, an increase of nearly five per cent to Rs 6,70,936.61 crore was seen in the total average AUM of 35 fund houses as per the data available on the website of the Association of Mutual Fund of India (AMFI).
In July an increase in the average AUM of fund houses was observed included Canara Robeco MF, Deutsche MF, IDFC MF, Religare MF and LIC MF.
While an additions of Rs 5,168.20 crore was seen in some of the fund houses like HDFC MF assets under management (AAUM), while ICICI Prudential MF's AUMs witnessed a growth of Rs 3,159.09 crore in July.