Anil Ambani exploring setting up ‘Reliance Bank’

Speaking at the annual general meeting of the company in Mumbai, Anil Ambani, the chairman of Reliance Capital, said growth has so far been achieved mostly through the organic route. Hinting at the inorganic route for future growth, he added: "Our strategy is now to unlock value from all our major businesses for the benefit of our 1.3 million shareholders"

Mumbai: Industrialist Anil Ambani today said that his group's financial services arm Reliance Capital will explore all possible opportunities to enter the banking sector and plans to unlock value in all its major businesses, reports PTI.

The banking entity of the group could be called 'Reliance Bank', Mr Ambani told the shareholders of Reliance Capital.

Replying to shareholders' queries on whether the company would consider the issue of bonus shares and a special dividend, Mr Ambani said he would take these proposals to the board.

Speaking at the annual general meeting of the company here, Mr Ambani, the chairman of Reliance Capital, said growth has so far been achieved mostly through the organic route.

Hinting at the inorganic route for future growth, Mr Ambani said: "Our strategy is now to unlock value from all our major businesses for the benefit of our 1.3 million shareholders."

Earlier this year, Reliance Capital signed a deal with Japan's Nippon Life for sale of a 26% stake in Reliance Life Insurance for over Rs3,000 crore in the country's largest-ever finance services sector foreign direct investment (FDI) transaction.

Recently, Reliance Capital had also signed a memorandum of understanding with Nippon Life for evaluating collaboration opportunities-including a strategic partnership-across all Reliance Capital-promoted financial businesses.

Mr Ambani said that the talks for a stake sale in its asset management business to Nippon were also in advanced stages.

In addition, the company would consider a stake sale in other businesses, like general insurance, as well.

Reiterating the group's interest in setting up a bank, Mr Ambani said that banking was a new growth opportunity and it would evaluate opportunities to enter this high growth sector.

It was keeping track of all regulatory developments on this front, he said, adding that significant under-penetration of financial products and services in India would continue to create immense opportunities for future growth.

The company also plans to take its asset management businesses to other emerging markets and would look at further expansion of its wealth management and private equity businesses, Mr Ambani said.

"From a single business of nominal scale in 2005, we are pleased to have established multiple businesses across the entire spectrum of financial services," Mr Ambani said.

He said that Reliance Capital has become the country's largest non-banking finance company (NBFC), with a net worth of nearly Rs8,000 crore, more than two crore customers and 8,000 offices across the country with a staff strength of over 18,000 people.

"Despite being a late entrant, Reliance Capital has achieved leadership position in all its major businesses in a highly competitive business environment," he said.

At the AGM, Reliance Capital shareholders also approved a proposal for sale of an up to 25% stake in the company to institutional investors through Qualified Institutional Placement (QIP) of securities.

Addressing the shareholders, Anil Ambani further said that Reliance Capital would continue to pursue a conservative approach on its debt profile.

The proceeds of over Rs3,000 crore from the stake sale in Reliance Life would be used to repay and reduce debt, he said.

He further said the company would focus more sharply on each of its businesses in the next five years and would strive to figure among the top-three players in each of the segments on various parameters.

At the AGM, the shareholders also approved proposals like adoption of full-year financial statements, declaration of a Rs6.50 per share dividend for the 2010-11 financial year and re-appointment of Amitabh Jhunjhunwala and CP Jain as directors of the company.

Shares of Reliance Capital rose by 3.48% to Rs402.90 in noon trade on the Bombay Stock Exchange.

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Planning Commission defends Rs32 a day limit for poverty line

In its affidavit to the Supreme Court, the Planning Commission has stated that a person with consumption of up to Rs32 per day would be considered poor in urban areas. The per capita consumption limit in rural area has been fixed at Rs26 a day. Its deputy chairman Montek Singh Ahluwalia clarified that the amount fixed were per each person not per family

Beijing: Defending the Planning Commission's criteria under which those who consume items worth more than Rs32 in urban areas in a day are not poor, its deputy chairman Montek Singh Ahluwalia on Monday said the limit will not be the basis for extending benefits to the poor, reports PTI.

"We have not made any new policy decision. The Supreme Court asked us how we calculate the poverty line, we gave the factual explanation. I believe the explanation we have given is factually correct," Mr Ahluwalia, who is here to attend the first India-China Strategic Economic Dialogue, told the Indian media.

"That it how the poverty lines are set up and that is how poverty lines are updated," he said commenting for the first time after the controversy broke following an affidavit filed by the Planning Commission in the Supreme Court.

In its affidavit, the Planning Commission has stated that a person with consumption of up to Rs32 per day would be considered poor in urban areas. The per capita consumption limit in rural area has been fixed at Rs26 a day.

Asserting that the data forwarded to the apex court was set by the Tendulkar Committee which was appointed to define the poverty line, he said the amount fixed were per each person not per family.

"This is the number the Tendulkar Committee recommended which is an expert group. We accepted that which mean that the poverty numbers went up," he said.

"Many in the media misread the affidavit. I have heard the people say how a family of five can live on Rs32. This number is a per capita number, between the rural and urban.

For a family of five it has to be multiplied by five," Mr Ahluwalia said.

About the poverty criteria fixed using the Tendulkar Committee methodology, Mr Ahluwalia said, "I am not sure, what we can do about this as it is a recommendation... may be we can appoint another committee that is all," Mr Ahluwalia said.

He also countered the perception that the poverty line of 32% as per the Tendulkar panel will be applied for the purpose of the proposed food security bill and other such schemes for the Below Poverty Line (BPL) families.

The latest data of the Planning Commission indicates that poverty in India has declined to 32% in 2009-10 from 37.2% of the population five years ago.

The preliminary estimates are based on the formula suggested by the Tendulkar Committee for computing the number of poor in the country.

"Question is what is it that are you upset about? If you are upset about 32% means that the Planning Commission wants to restrict it to 32%, it is factually incorrect. In all the internal discussion, I have been supportive saying we can manage 41%," he said.

"There is no unique logic to what should be poverty line. The Planning Commission believes that poverty is multi-dimensional concept. It is not going to be just looking at consumption but the availability of important elements like clean drinking water, health and education," he said.

"The Planning Commission's motives are being wrongly understood. It is not our objective to deny anybody benefits.

That is a separate issue to be decided by government. It is for government to decide," he said.

He said he is travelling to Paris from here to attend G-20 meeting. He will explain his stand more clearly to after his return to New Delhi on 3rd October.

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