Reliance Retail eyes credit arm

Reliance Industries is foraying into personal finance services, including the highly competitive automobile and consumer loan segment.

The service will be provided under the aegis of the company's retail venture. An executive of a leading multinational financial services company has been roped in for the venture.

When contacted, a company spokesperson declined to comment.

A source said the aim was to provide Reliance Retail users with one-stop services at the stores. "The company intends to provide financial services on its own. If required, it may also rope in banks like ICICI Bank and HDFC Bank to complement the product portfolio," he added.

Citing an instance, the source said in some of its bigger properties, where Reliance Retail would set up automobile marts, it would also provide the facility of car loans.

Reliance will have to float a non-banking finance company to provide these services. While the company says it is early days yet to incorporate a non-banking finance company, "it will comply with all the statutory legal requirements" for this venture. Other details, including the size of the lending portfolio, are not yet final.

The source added that Reliance Industries did not foresee any non-compete issues with Reliance Capital of the Reliance-Anil Dhirubhai Ambani Group. "Reliance Industries' personal finance services will fit into the retail plans and, therefore, there is no question of violating any agreement between the two groups," he said.

"Instead of customers running around for loans, Reliance Industries wants to provide these services on its own," he added.

The investment for the personal finance venture will be separate from the Rs 25,000 crore that Mukesh Ambani has committed to his retail foray. That money is meant to be used to own retail assets as well as the supply chain.

The source said personal finance services would not be available in all stores and formats, because it would not make sense to provide them in supermarkets.

This is not the only retail venture planning to finance users' purchases. The Future Group, formerly Pantaloon, which has a tie-up with ICICI Bank for retail financing, is also looking at getting into the business on its own.

Headed by Kishore Biyani, the group will hold a 74 per cent stake in Future Generali through Pantaloon Retail, while Generali will have a 26 per cent stake.