Anil Ambani's RCap to shut two lending arms by December

Reliance Capital has two credit verticals -- Reliance Commercial Finance and Reliance Home Finance -- with a cumulative asset of over Rs 25,000 crore.

Facing headwinds, Anil Ambani-run Reliance Capital, which has credit as well as insurance and mutual fund verticals, has decided to shutter its two lending arms by December, the company said Monday.

Reliance Capital has two credit verticals -- Reliance Commercial Finance and Reliance Home Finance -- with a cumulative asset of over Rs 25,000 crore.

This is second major business that the Anil Ambani-led group is exiting after its once flagship Reliance Communication was shuttered two years ago and is now under the bankruptcy process.

Its defence business -- Reliance Naval -- is also under severe financial stress.

“As part of the business transformation, Reliance Capital has decided to exit the lending business. Both our lending businesses — Reliance Commercial Finance and Reliance Home Finance -- are working closely with all our lenders and other stakeholders to finalise the resolution plans which are expected to be completed by December," Ambani told the shareholders at the AGM.

He said even after shuttering the lending business, RCap will continue to be the financial shareholder of these companies so that shareholder value increases under the new management and effectively debt of reliance capital comes down by Rs 25,000 crore.

Launched 15 years ago, RCap employs around 30,000 and also has mutual fund and two insurance verticals in which Japanese financial major Nippon owns 43 per cent, down from 49 per cent pre-IPO.

Ambani blamed the crisis and the resultant decision to exit to the severe collateral damages the group had taken due to a combination of factors - crisis in the financial services sector, irrational action by auditors and rating agencies and now the slowdown of the economy.

"These events aided and abetted by reckless selling and rumour mongering by vested interest have affected our shareholders," he said.

He claimed that his group has over 60,000 crore of receivables in regulatory and arbitrary matters which are pending for the past five to 10 years.

Reliance General Insurance is adequately capitalised and is valued at Rs 8,000 crore, while Reliance Life has over 10 million policy holders and his 51 percent stake has a valuation of Rs 7,000 crore, he claimed.

Photograph: ANI Photo