AIG to launch consumer finance arm, AMC in India

MUMBAI: The AIG Group has received the RBI approval for setting up a non-banking finance company (NBFC).AIG will launch its consumer finance and asset management businesses in India. AIG Capital India, the name under which the NBFC would commence operations, would focus on businesses such as credit cards, mortgage financing, consumer durable financing and personal loans in India, in line with its global experiences.

Close to half-a-dozen banks and financial institutions are still awaiting RBI’ response on their NBFC applications. These include multinational players like HSBC, Deutsche Bank, Goldman Sachs and Barclays which acquired Chennai-based NBFC Rank Investments and local players like HDFC Bank.

Some of these players had put in an application to RBI more than a year ago.
Sunil Mehta, AIG’ country head and chief executive, said, “We would look at launching the asset management business by early ‘07. Under consumer finance, the NBFC will be targeting the middle-income customer segment with particular focus on Tier-II and Tier-III cities.”

Currently, AIG is into businesses such as insurance and financial services and has operations in more than 100 countries. Companies under the AIG Group also provide services in retirement and asset management globally. Many international players have been looking at getting into the NBFC business on the back of a growth in consumer finance business. Also, unlike a foreign bank, there is no restriction on branch openings for NBFCs.

RBI has been looking at tightening the NBFC norms for sometime now. Meanwhile, RBI clarified an entity will be treated as an NBFC only if its financial assets are more than 50 % of its total assets and income from financial assets is more than 50 % of the gross income.

Last month, RBI had made it mandatory for all NBFCs to submit a certificate from statutory auditors on an annual basis to the effect they continue to undertake the NBFI business.