As it awaits final RBI guidelines to apply for a universal banking license, 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 Reliance Group 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 (SMTB) 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.
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, 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.
Ghosh further said that RBI was likely to come out with its final guidelines about on-tap universal banking license 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 license, saying these structures do not fit into its scheme of things and the group was interested in the universal banking licence.