With only four working days remaining for approaching the Reserve Bank of India with an application for banking license, four listed companies, including three financial services firms, decided to take the plunge.
Diversified conglomerate Aditya Birla Nuvo’s board on Wednesday decided to approach the RBI for a banking license. Reliance Capital and Magma Fincorp too made similar announcements. The promoters of Religare Enterprises Ltd announced disinvestment of shares, including to a US based bank (Customers Bancorp Inc.) in a bid to align their shareholding with the new bank licensing norm.
Reliance Capital
The Anil Ambani-controlled Reliance Capital will be the promoter of the proposed bank.
Two financial behemoths from Japan — Nippon Life Insurance and Sumitomo Mitsui Trust Bank — have agreed to take 4-5 per cent stake each in the proposed bank, Reliance Capital said in a filing to the stock exchanges on Wednesday.
The two Japanese firms taking minority stake each in the proposed bank is, however, subject to regulatory approvals.
“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, Reliance Capital, said in a statement.
The company’s shares closed at Rs 320 on the National Stock Exchange, gaining Rs 6 over the previous day’s close of Rs 314.
Hitoshi Tsunekage, CEO, Sumitomo Mitsui Trust Bank, said the company was “pleased to start a partnership with Reliance Capital. We hope to contribute toward the development of the Indian financial industry through our collaboration, which we believe will be a successful one.”
For Nippon Life, this will be third investment in the Anil Ambani Group of companies. In March 2011, Nippon Life Insurance acquired 26 per cent stake in Reliance Life Insurance for Rs 3,062 crore. In January 2012, it acquired 26 per cent stake in Reliance Asset Management Company for Rs 1,450 crore.
Aditya Birla Nuvo
Aditya Birla Nuvo has five lines of business — financial services (Aditya Birla Financial Services); telecom (Idea Cellular); manufacturing (cement, aluminium, copper and viscose staple fibre); fashion and lifestyle (Madura, Pantaloons and textiles); and IT-ITeS (BPO).
The financial services strategic business unit, among others, has presence in the asset management, life insurance, non-banking finance, and broking space. In FY2013, Aditya Birla Financial Services logged revenue of Rs 6,390 crore and a net profit of Rs 672 crore.
Magma Fin Corp
Magma Fincorp Ltd, the Kolkata-headquartered non-deposit taking NBFC is registered with the RBI as an asset finance company.
The NBFC had total loan assets of Rs 16,240 crore under management as on March 31, 2013. It has 278 branches across the country and employs about 75,00 people.
Earlier this year, Magma, through a postal ballot, obtained shareholders’ nod for a capital-raising plan of Rs 500 crore through issue of securities. It has also proposed to increase the borrowing limit of the company from existing Rs 15,000 crore to Rs 25,000 crore. Its AGM is scheduled for July 18.
Promoters currently hold 33.7 per cent of the paid-up capital of the company of Rs 37.99 crore. IFC, Macquarie Bank and FIIs, such as CLSA Mauritius, Deutsche Securities Mauritius, KKR Mauritius, hold 43.55 per cent in Magma.
Religare Enterprises
In the run-up to making an application to the RBI for getting a banking licence, promoters of Religare Enterprises Ltd (REL) will sell shares to US-headquartered Customers Bancorp Inc. (CUBI). The foreign bank has agreed to invest $51 million in REL through a combination of primary and secondary market investments.
On Monday (June 24) Kolkata-based Srei Infrastructure Finance and Edelweiss Financial Services also decided to seek a banking licence from the RBI. And, last week, IDFC Ltd board too approved a resolution to apply for bank licence.