Consumer Finance in India-Part 2

To complement its grand retail plans, Reliance Retail is setting up an NBFC with focus on credit cards and loans in a JV withCitigroup. Citi is likely to hold the major stake and total investment pegged is Rs. 450 crore.The NBFC would provide retail loans to customers are sale point and would ease consumer buying process by offering finance to buy goods on interest-free EMIs.

Consumer finance is a high-growth industry in India but it is doubtful whether the JV would be expanded outside the scope of Reliance Retail as due to no-compete clause with Anil Ambani, Mukesh Ambani could not enter into financial services biz as ADAG already runs Reliance Capital.

For Citigroup, it would mean joining hands with India’s largest business group and getting access to the biggest future retailer in India. While for Reliance, it would get the expertise of world’s best known financial giant and use their knowledge and experience to expand its consumer base.

Kishore Biyani’s Future group already has its consumer finance business called Future Money which provide loans for purchases made at its retail stores.