Reliance Capital ropes in Japanese partners for banking foray

Anil Ambani’s flagship financial services company Reliance Capital is bringing Japan's Sumitomo Mitsui Trust Bank (SMTB) and Nippon Life Insurance as minority partners in its proposed plan to foray into banking business through a separate arm.

Reliance Capital will be the promoter of the proposed bank while SMTB and Nippon Life Insurance propose to pick 4-5 per cent stake each in the venture. The company did not say how much the Japanese partners will shell out for the venture.

“SMTB is amongst the largest banks in Japan, and the largest institutional investor in the country. SMTB has vast experience in retail and institutional banking, and we look forward to their long-term contribution in building the proposed bank as our strategic partner. We are also extremely happy to extend our relationship with Nippon Life Insurance, our valued partner in our life insurance and asset management business, to the proposed new bank,” Sam Ghosh, CEO, Reliance Capital.

In 2011, Japan’s largest life insurer Nippon Life Insurance struck a deal to acquire 26 per cent in Reliance Life Insurance Co Ltd for Rs 3,062 crore. Thereafter, the partners said that they intended to expand the scope of their existing business partnership to other financial services, such as asset management. Last year Nippon Life Insurance signed an agreement to buy 26 per cent stake in Reliance Capital Asset Management Ltd for Rs 1,450 crore.

In another development, BK Modi-controlled Spice Global, a $2 billion diversified conglomerate with interests in mobility solutions and entertainment, which is planning to apply to the Reserve Bank of India for a banking licence, is reportedly in talks to rope in a Singapore-based investor.

This will mark a bigger play for Singapore-headquartered Spice Global in the financial services domain. The cash-rich group has an exposure to financial services through mobile banking services besides Wall Street Finance, a non-banking financial company. The group has also roped in former SEBI chief DR Mehta and former senior executives of Citibank and HDFC Bank in to its board to prepare a blueprint for its banking foray, Modi was quoted as saying.

KKR-backed Magma Fincorp also said on Wednesday that the firm is looking to apply for a banking license.

Other leading financial groups that recently announced their plans to apply for banking licences include Aditya Birla Group, L&T, Shriram Group, Religare, Srei Infra, India Infoline, Edelweiss, Indiabulls as well as state-owned Power Finance Corporation and Life Insurance Corporation of India. One of those who have opted out due to certain provisions in the norms is Mahindra Group’s Mahindra & Mahindra Financial Services.

The late date for applying for the banking licence to the RBI is July 1.

(Edited by Joby Puthuparampil Johnson)

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