Anil Ambani Is Shutting Down Rcapital's Lending Biz

CASH-STRAPPED Reliance Capital has decided to shut down its two lending arms by December this year, group Chairman Anil Ambani said on Monday, sending the company’s shares tumbling by over 12.32% to an over two-decade low of Rs 24.55 apiece on the BSE.

Reliance Capital currently lends to small and medium enterprises through its unit Reliance Commercial Finance and to home buyers via Reliance Home Finance. Both these businesses have cumulative assets of over Rs 25,000 crore and accounted for about 15% of the company’s revenue during the last financial year.

The move comes as the non-banking financial company faced “collateral damage” due to a slowing economy and a lending crisis in the sector, Ambani said at the company’s annual general meeting.

Apart from lending, Reliance Capital has interests in asset management and general insurance businesses. Launched 15 years ago, RCap employs around 30,000 people.

The company has been divesting assets this year. It reduced its stake in asset management arm Reliance Nippon Life Asset Management Ltd to just over 4% from about a quarter.

In June, auditors raised several red flags around the fourth-quarter results of Reliance Capital, including a lack of clarity in related party transactions and accounting methodology.