Anil Ambani - led Reliance Capital on Thursday announced hiving off its commercial finance division into a separate wholly owned subsidiary.
In a statement, Reliance Capital said the board of directors approved the transfer of its commercial finance division into a separate wholly owned subsidiary.
The move aligns with the existing corporate structure of Reliance Capital having all its operating businesses as a wholly or majority owned subsidiaries.
The commercial finance business has an aggregate asset under management (including securitised portfolio) of Rs. 15, 049 crore as on December 31, 2015.
"All operating businesses of Reliance Capital Ltd. , except the Commercial Finance business, are held in its wholly or majority owned subsidiaries. Accordingly, to align the overall operating structure, it is proposed to transfer the Commercial Finance division of the Company into a wholly owned subsidiary, " Sam Ghosh, executive director and group CEO, Reliance Capital, was quoted as saying in the statement.
"This will also facilitate the treatment of the company as a Core Investment Company (CIC) in terms of applicable RBI regulations, " Ghosh added.
The proposal will enhance management focus on Reliance Commercial Finance and also provide flexibility to the company to unlock value through stake sale, Reliance Capital said.
The demerger will be soon filed for requisite approvals and would be effective from April 1, 2016, subject to necessary court and regulatory approvals.
As per the scheme, the commercial finance division of Reliance Capital would be merged into Reliance Gilts Limited, a wholly owned subsidiary of Reliance Capital, and this merged entity would be renamed Reliance Commercial Finance Limited.
Reliance Capital would be applying to the Reserve Bank of India for registering itself as a CIC, post the transfer, and this move would also facilitate the application of banking licence, as and when the RBI policy permits.