RIL tied-up with DE Shaw Group to Establish Financial Services Business in India

Reliance Industries (RIL) on 27 March 2011 announced that it tied up with DE Shaw Group to establish financial services business in India. The tie up pronounced RIL’s decision to enter the fast-growing Indian financial services sector. The tie-up happened in the backdrop of the Reserve Bank of India (RBI) and the Indian finance ministry thrashing out the norms for the entry of new players into the banking arena.

The non-compete agreement between the Reliance Anil Dhirubhai Ambani Group (ADAG) and Reliance Industries (RIL) signed in 2005 was scrapped in May 2010. The scrapping of the agreement gave Anil Ambani exclusive preserve over sectors such as telecom and media. SinceJune 2010 RIL picked up a 95 per cent stake in Infotel Broadband Services, the sole winner of a pan-India broadband spectrum licence. Anil Ambani Group had always expressed ambition of acquiring a banking licence.

Though the debate on whether large industrial conglomerates should be allowed in the sector continues the Central government in the recent past showed enthusiasm in allowing new entrants in the Indian financial service sector.