this story originally appeared in on may 13 2013new delhi the quest for a banking licence played a key role in defining the contours of the deal between piramal enterprises and shriram transport finance company stfc concluded last friday said two persons with direct knowledge of the matter piramal who originally intended to acquire a 20 per cent stake in the nonbanking finance company opted instead to pick up a 99 per cent stake so that both groups could apply for licences to set up new banks further the future shape of the alliance will depend on success in obtaining new bank licences which rbi is likely to issue sometime in the next 12 months the ajay piramal flagship executed the rs 1652crore deal in the secondary market by buying out pe fund tpgs stake in stfc but it has reached an understanding with the shriram promoters on the circumstances under which it could further raise its stake in the company in future however this possible second leg of the transaction is linked to the outcome of the quest for a bank licence shriram group founder r thyagarajan said there was no specific understanding on how the two groups might fulfil their banking ambitions we are optimistically at the beginning of a partnership which we expect to grow and prosper for the benefit of the enterprises he told et on sunday we will be working on it and right now we dont have any understanding on banking foray since both are planning to apply for new bank permits the probability of getting at least one licence is comparatively higher once the outcome is clear the nature of the relationship will undergo significant changes said the persons with direct knowledge of the deal both sides have in principle agreed to consider three options depending on how the banking policy pans out if shriram transport gets the banking licence and piramal fails the latter will increase its ownership in stfc either directly or indirectly to 20 per cent or more and will take a comanagement role alternatively if stfc does not get the banking licence but piramal acquires one the latter could exit shriram transport by selling its stake to the promoters or other group companies in the eventuality that both fail piramal will increase its holding and will take a comanagement role in shriram transport as a policy piramal does not comment on market speculation a spokesperson for the ajay piramal group said the acquisition of 99 per cent stake on friday ensures both the groups piramal enterprise and shriram transport remain independent entities and are free to apply for the banking licence had piramal acquired 10 per cent or more in stfc only one of them could have applied for the banking licence explained one of the persons familiar with the deal if more than 10 per cent had been acquired stfc would have been treated as an associate company of piramal enterprises two companies from the same