Exuding confidence in setting up a profitable banking venture, Anil Ambani said that the proposed bank will help lower Reliance Capital’s debt to one-fourth of current levels and would be listed as a separate entity in three years.
Addressing shareholders of Reliance Capital, the group’s financial services arm, Mr Ambani said that immediate benefit of the proposed bank would be a reduction in the company’s consolidated debt from Rs. 20,000 crore to Rs. 5,000 crore.
“Apart from the long-term growth potential of the proposed bank as a profitable institution in itself, the immediate benefit to your company will be the reduction in our consolidated debt from approximately Rs. 20,000 crore to Rs. 5,000 crore, upon transfer of our Commercial Finance business to the proposed bank,” Reliance Capital chairman Anil Ambani said.
The company, which is already present in a host of financial services businesses like insurance, mutual funds and brokerage, submitted an application for banking license in June to the Reserve Bank of India (RBI). Reliance Capital is one of the 26 entities that have applied for banking licence.
Mr Ambani said that the banking foray would also help improve R-Cap’s debt-equity ratio to “a most conservative level of 0.5-1, which is far lower than industry standards”.
Stressing that the company was adequately capitalised, Mr Ambani said there were no plans to ask Reliance Capital shareholders for providing initial capital for the bank.
“We presently have no plans to make a capital call, or ask you for money to invest in the bank, as your company is adequately capitalised.”
“However, at the end of three years, we intend to list the proposed Bank, as per existing guidelines, and you may be assured we will fully explore all avenues to benefit our over 12 lakh shareholders at that time,” Mr Ambani said.
Reliance Capital plans to focus on five major businesses – life insurance, general insurance, health insurance, asset management and banking – for future growth, he added.
Source – PTI
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