FIs cannot ask for board seat in Reliance Industries

Financial institutions (FIs) cannot ask for board representation on Reliance Industries Ltd (RIL) since they do not collectively hold 10 per cent in the company.

The chairman of the Life Insurance Corporation of India (LIC), R N Bhardwaj, said: "Unless we collectively hold 10 per cent in a corporate we cannot get a board seat."

Today, three FIs "" LIC (4.4 per cent), Unit Trust of India (1.15 per cent) and General Insurance Corporation of India (less than 1 per cent) "" together have 6.97 per cent holding in RIL.

A GIC senior executive added that when institutions do not have much holding and are not investing more, they cannot seek any board representation.

There has been no FI representative since Mahesh Rao of GIC completed his 5-year term last year. LIC has board representation "" V R Galkar "" in Reliance Energy where it holds 13 per cent stake.

"We are watching the situation and if necessary "" and when the need arises "" we will look into the board slot issue," Bhardwaj said.

According to him, FIs may also look at the option of increasing or decreasing their exposure to the company.

LIC has extended credit of about Rs 2,000 crore to Rs 2,500 crore to RIL. Meantime, other chiefs of institutions said no meeting has taken place to discuss the issue, putting to rest media speculation that FIs are seeking board representation.

The FIs' stake has remained minuscule at less than 7 per cent through the entire controversy and has not changed since September 2004.