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Banking licence likely to help Rel Capital to reduce debt by Rs 15,000 crore

27 Aug 2013 Evaluate

Reliance Capital has submitted an application for a banking license in June 2013, is likely to reduce its debt by Rs 15,000 crore to Rs 5,000 crore. ADAG group chairman Anil Ambani said that, if the company receives the license, apart from the long term growth potential of the proposed Bank as a profitable institution in itself, the immediate benefit to the Company will be the reduction in its consolidated debt from approx. Rs 20,000 crore to Rs 5,000 crore, upon transfer of their Commercial Finance business to the proposed Bank. This will improve their debt / equity ratio to a most conservative 0.5:1, far lower than industry standards.

Further, the Company intends to list the proposed Bank in three years in accordance with existing guidelines. Meanwhile, the company is planning to focus on five major businesses- Life Insurance, General Insurance, Health Insurance, Asset Management and Banking for its growth.

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