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IRDA nod for Reliance Cap sale of 26% stake in insurance biz

The final approval for the proposed sale would be granted upon receipt of the Reserve Bank of India's (RBI) consent. This transaction pegs the total valuation of Reliance Life Insurance at around Rs11,500 crore

New Delhi: The Anil Ambani Group's financial services arm Reliance Capital today said it has received an in-principle approval from insurance sector regulator Insurance Regulatory Development Authority (IRDA) for its proposed 26% stake sale in Reliance Life Insurance to Japan's Nippon Life, reports PTI.

The final approval for the proposed sale would be granted upon receipt of the Reserve Bank of India's (RBI) consent, Reliance Capital said in a statement.

"We are delighted to receive the IRDA approval and expect to conclude this transaction within the next few weeks," Reliance Capital CEO Sam Ghosh said.

Commenting on the development, Nippon Life Insurance president Yoshinobu Tsutsui said, "This is great news for both of us. We hope we will be able to close the transaction in the near future."

Earlier this year, Nippon Life had signed a definitive agreement for acquiring a 26% stake in Reliance Life Insurance for Rs3,062 crore.

This transaction pegs the total valuation of Reliance Life Insurance at around Rs11,500 crore.

Nippon Life is a 122-year-old Global Fortune 100 company and the seventh largest life insurer in the world. It is a leading private life insurer in Asia and Japan.

Reliance Capital figures among the country's top-four private sector financial services and banking groups in terms of net worth.

Reliance Capital was trading at Rs407.10, up 1.23% on the Bombay Stock Exchange in late-morning trade.

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RBI not to intervene in forex market: RBI deputy governor

“The policy that we have followed for long time (is) that the rupee should move according to market conditions... We allow the rupee to fluctuate depending on market situation. The RBI would only intervene when there is excessive instability,” RBI deputy governor Anand Sinha said

New Delhi: The Reserve Bank of India (RBI) on Tuesday said that it will not intervene in the foreign exchange market unless the situation is grave, though the rupee touched 16-month low of 47.59 against the US dollar, reports PTI.

“It is clear policy of RBI that we address volatility and not the level unless it is grave and adverse situation,” RBI deputy governor Anand Sinha told reporters when asked if the RBI would intervene to check volatility in the currency market.

The rupee closed at 47.59/60 to a US dollar today, lowest since May 2010. As the stock markets fell around the world and capital flows reversed from the emerging markets, including India, the rupee lost by more than 2% against the dollar in the last one week.
Agreeing with Mr Sinha, Planning Commission deputy chairman Montek Singh Ahluwalia too said that the central bank should intervene in forex market only in extreme circumstances.

“The policy that we have followed for long time (is) that the rupee should move according to market conditions... We allow the rupee to fluctuate depending on market situation. The RBI would only intervene when there is excessive instability,” he said.

Meanwhile, replying to a query related with entry of corporates in the banking sector, Mr Sinha said the business houses have shown that they have the managerial capacity.

“...at the same time we are acutely aware of self-dealing and therefore the draft guideline talks in terms of stringent eligibility criteria and a host of surrounding control to ensure that self-dealing is not allowed or it is checked in time,” he said.

The RBI recently released draft guidelines for entry of new private banks in the country.

However, central bank would issue the final guidelines for granting bank licences to corporates only after Parliament approves the Banking Laws (Amendment) Bill, 2011.

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