Reliance Cap to seek banking licence with Japanese partners

Reliance Capital Ltd, an arm of the Anil Ambani- controlled Reliance group, said today it would apply to the Reserve Bank of India for a mainstream banking licence, in partnership with Japanese lenders Sumitomo Mitsui Trust Bank and Nippon Life Insurance.

Under the proposal, the two Japan-based companies plan to own between 4 per cent and 5 per cent stakes each in the proposed bank, while Reliance Capital will be the promoter.

The Reserve Bank of India issued guidelines in February allowing any type of company to set up a bank, provided it meets certain criteria. It is known that while RBI governor D Subbarao is keen on compliance with stringent norms for new private banks, finance minister P Chidambaram favours a more liberal approach.

"Reliance Capital is delighted to partner with two of Japan's largest firms - Sumitomo Mitsui Trust Bank and Nippon Life Insurance - for our proposed new bank," Sam Ghosh, chief executive officer of Reliance Capital, said in an official release.

Reliance Capital shares jumped 4.68 per cent to Rs 328.85 on the Bombay Stock Exchange in morning trade.

The agreements were signed by Ghosh, Sumitomo Mitsui Trust Bank's overseas business manager Kuniyuki Shudo, and Hirohuki Nishi, his counterpart in Nippon Life Insurance.

For Nippon Life, this will be third investment in Anil Ambani Group companies.

In March 2011, Nippon Life Insurance had acquired 26 per cent stake in Reliance Life Insurance for Rs3,062 crore. In January 2012, it had acquired 26 per cent stake in Reliance Asset Management Company for Rs1,450 crore.