Reliance Capital Chairman Anil Ambani on Monday said the company will exit the lending business as it faced “collateral damage” due to a slowing economy and a lending crisis in the financial sector. Addressing the company’s annual general meeting (AGM), Ambani said that he expects the resolution plans for Reliance Home Finance and Reliance Commercial Finance to be completed by December.
“This will bring lower the Reliance Capital debt by about Rs 25,000 crore,” he said. The company’s shares fell 12.32 per cent to Rs 24.55 on the BSE Monday. Ambani said the company has suffered over the last six months as collateral damage due to crisis in the financial services industry, irrational action of rating agencies and auditors, as well as slowdown in economy. The Reliance Group has repaid over Rs 35,000 crore in the last four months and will repay another Rs 15,000 crore by next March.
In June, auditors raised several red flags around the company’s fourth-quarter results, including a lack of clarity in related party transactions and accounting methodology.
Apart from lending, Reliance Capital has interests in asset management and general insurance businesses. The company has been divesting assets this year. It reduced its stake in Reliance Nippon Life Asset Management to just over 4 per cent from about a quarter. “It is unfortunate that during all this noise, the true value of our businesses has not been recognised,” Ambani said.
At the Reliance Communication AGM, resolution professional Ashish Nanavaty said it has received claims worth Rs 84,268 crore from their creditors and the quality of the resolution plan will depend on what the investors make of the claim.