Reliance Capital To Shut Reliance Home Finance, Commercial Finance; Shares Fall

The scrip plummeted 12.32 percent to close at Rs 24.55 on the BSE.
Reliance Group Chairman Anil Ambani. (Photographer: Adeel Halim/Bloomberg)
Reliance Group Chairman Anil Ambani. (Photographer: Adeel Halim/Bloomberg)

Shares of Reliance Capital Ltd. fell as much as 13.60 percent Monday after the Anil Ambani-led firm announced plans to shut down its two lending arms by December.

The stock ended the day 12.32 percent lower at Rs 24.55 apiece while the benchmark Sensex fell 0.40 percent to 38,667.33 points. On the National Stock Exchange, Reliance Capital shares fell 12.52 percent to Rs 24.45 apiece.

Reliance Capital has two credit verticals—Reliance Commercial Finance and Reliance Home Finance Ltd.—with cumulative asset of over Rs 25,000 crore.

Shares of Reliance Home Finance fell 5 percent to hit lower circuit of Rs 3.81 on the BSE during the day. It settled 4.49 percent lower at Rs 3.83.

"As part of the business transformation, Reliance Capital has decided to exit the lending business. Both our lending businesses—Reliance Commercial Finance and Reliance Home Finance—are working closely with all lenders and other stakeholders to finalise the resolution plans which are expected to be completed by December," Ambani told shareholders at the company’s annual general meeting in Mumbai.

This is the second major business that the Anil Ambani-led Reliance Group is exiting. Reliance Communication Ltd. was shuttered two years ago and is now undergoing debt resolution at India’s bankruptcy course. Its defence business, Reliance Naval, is also under severe financial stress.

Ambani blamed the crisis and the resultant decision to exit to the severe collateral damages the group had taken due to a combination of factors, including the NBFC crisis, irrational action by auditors and ratings agencies and the slowdown in the economy.

Other listed Reliance Group companies also faced selling pressure on Monday, with Reliance Infrastructure Ltd. falling 12.28 percent, Reliance Power Ltd. 8.71 percent and Reliance Nippon Life Asset Management Ltd. 2.13 percent on the BSE.

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