WebSify
Follow us on
Mail
Print

RIL may apply for bank licence

Source : BUSINESS_STANDARD
Last Updated: Sat, Feb 23, 2013 05:05 hrs
RIL hires Rothschild banker as M&A head - sources

India's largest private sector company, Reliance Industries Limited (RIL), says it is likely to apply for a banking licence, as it meets all eligibility criteria announced by the Reserve Bank of India (RBI) on Friday. The company had identified financial services as a key business, said a source privy to RIL's plans.

RBI's eligibility norms on new banking licences were clear and transparent, the source said, adding RIL's Rs 81,000-crore cash pile (as of December 2012) gave the company an edge, in terms of entering the banking sector.



"It is high on Mukesh Ambani's agenda," the source said.

RIL Chairman and Managing Director Mukesh Ambani serves as a director on the board of Bank of America. Insiders expect RIL to bid for a banking licence, as it is backed by a powerful brand, as well as cash. In March 2011, RIL and DE Shaw had announced a joint venture to set up a financial services business in India. They are sill awaiting necessary regulatory approvals for starting the business.

RIL has been preparing for a banking foray by getting out of the real estate business. It had sold part of its stake in the Haryana SEZ to IL&FS. In the companies he personally owns, too, Ambani has been cleaning up the balance sheets of all his investments.

An email sent to RIL on Friday didn't elicit any response.

Mukesh Ambani's banking plans would pit him directly against his younger brother Anil Ambani, who has announced similar plans and is expected to apply for a licence. When their father Dhirubhai Ambani's businesses were split between them, the brothers had a no-competition agreement. Later, the agreement was scrapped.

Analysts have often wondered how RIL could use its massive cash pile. Currently, the company is carrying out a $10-billion expansion of its petrochemicals business. It would also roll out its fourth-generation telecom services. It is spending about Rs 2,700 crore in its retail business this year.

blog comments powered by Disqus
most popular on facebook
talking point on sify finance