Sumitomo Mitsui may take up to 10% stake in Reliance Bank

December 28, 2014 04:14 pm | Updated November 17, 2021 05:03 am IST - New Delhi

Anil Ambani-led Reliance Capital will consider giving up to 10 per cent stake to its newly-signed strategic partner Sumitomo Mitsui Trust Bank of Japan in its proposed bank. File photo

Anil Ambani-led Reliance Capital will consider giving up to 10 per cent stake to its newly-signed strategic partner Sumitomo Mitsui Trust Bank of Japan in its proposed bank. File photo

As it awaits final RBI guidelines to apply for a universal banking licence, Reliance Capital will consider giving up to 10 per cent stake to its newly-signed strategic partner Sumitomo Mitsui Trust Bank of Japan in its proposed bank.

Besides, the financial services arm of industrialist Anil Ambani-led business conglomerate is also open to the idea of another Japanese partner, Nippon Life, acquiring a further up to 10 per cent stake in its banking venture, as and when RBI’s policies permit formation of such a bank.

Reliance Capital last week roped in Sumitomo Mitsui Trust Bank as a strategic partner to collaborate on various businesses. SMTB, Japan’s largest financial institution with asset under custody of $1.8 trillion, will take an initial stake of 2.77 per cent in Reliance Capital at an investment of Rs. 371 crore as part of a “comprehensive long-term strategic alliance between the two companies”.

“The deal is likely to close in about four weeks from now. We need clearance from the Competition Commission of India (CCI), while shareholders’ approval would be sought at the Extraordinary General Meeting (EGM) scheduled to be held on January 23,” Reliance Capital CEO Sam Ghosh told PTI.

“As part of the deal, SMTB will get a 2.77 per cent stake in Reliance Capital, while we have already begun discussions on various areas where we can work together.

“They have come in as a long-term strategic partner at the group company and we are looking into areas of businesses where this partnership can be extended. This would include the banking venture that we intend to start after getting a universal banking licence as and when RBI decides to grant such licenses,” he added.

Mr. Ghosh said SMTB will certainly be a partner in the banking venture and given their expertise in running a bank and the exposure they will get to Indian banking sector, it would be a win-win situation for both the partners.

Asked about the quantum of stake that SMTB might take in the banking venture, he said the extant regulations, under which RBI has issued two new licenses, a foreign entity can take up to 10 per cent stake and Reliance Capital would like the Japanese partner to take the maximum possible equity.

To a question about another Japanese giant Nippon Life, which is already a partner in Reliance Cap’s life insurance and mutual fund ventures, also having evinced interest in partnering in its banking venture, Mr. Ghosh said that a new bank can have up to 49 per cent overall foreign stake.

This leaves the scope for another partner to take further up to 10 per cent stake, he said, while adding that no talks were underway at the moment with Nippon in this regard.

Mr. Ghosh further said that RBI was likely to come out with its final guidelines about on-tap universal banking licence regime by March 2015 and the company will wait for those norms for its foray into banking business.

He also ruled out applying for payment bank or small finance bank licence, saying these structures do not fit into its scheme of things and the group was interested in the universal banking licence.

Top News Today

Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.