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| - Fact Check: Reliance Jio is not taking over Federal Bank. Viral 'media release' is a hoax
A media release from Reliance Jio Infocomm Ltd says the company is going to acquire Federal Bank at 10 billion USD. India Today Anti Fake News War Room has found that the said 'media release' has several anomalies.
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India Today Fact Check
Both Reliance Jio and Federal Bank have denied the viral message calling it fake. The viral ‘media release’ has several anomalies. Also, under RBI guidelines large corporate and industry houses cannot own a bank due to conflict of interest.
A screenshot purportedly showing a media release from Reliance Jio claims the company is going to acquire Federal Bank at 10 billion US dollars. The viral notice starts with, “Reliance Jio to Acquire Federal Bank at 10 Billion USD valuation. Jio to enter banking industry with the acquisition.”
The rest of the text gives details about Reliance Jio Infocomm Ltd. and its functions.
However, both Reliance Jio and Federal Bank have denied the viral message calling it fake. India Today Anti Fake News War Room (AFWA) has found that the said ‘media release’ has several anomalies. Also, under RBI guidelines, large corporate and industrial houses cannot own a bank due to conflict-of-interest clause.
AFWA investigation
AFWA reached out to Reliance Jio and Federal Bank to enquire about the viral message. Both have called it fake and ruled out the possibility of any such acquisition. Also, neither have issued any press statement about such an acquisition.
In accordance with the Banking Regulation Act, 1949, the Reserve Bank of India (RBI) does not allow corporate or industry houses to own or run a bank till date.
In November last year, the RBI’s internal working group had recommended some sweeping changes in bank ownership. These include allowing large corporate and industrial houses to own banks by amending the Banking Regulation Act. But these are still ‘recommendations’, and large corporate houses in India still can’t own a bank due to conflict-of-interest clause.
Also, we have found several anomalies in the viral notice that is discussed in great detail below. A comparison with an original media release by Reliance Jio reveals glaring differences.
Original Reliance Jio release
Viral image
1. In a typical Reliance media release, quotes of company chairman Mukesh Ambani are usually carried. Particularly, in a press statement for acquisition or merger, reactions from both parties are expected. But in the viral notice, no such statements can be seen.
2. Although the “Jio Digital Life” masthead in the viral image looks original, the vague and oversimplified language used in the content to explain a critical issue like acquisition suggests the viral ‘media release’ is made up or fake. The last two paragraphs are a straight lift-up from an original media release.
3. The viral notice says, “RJIL has paid total consideration of Rs 73,616 crore (inclusive of taxes) to Federal Bank and has assumed ownership.”
First, the market cap or valuation of Federal Bank is Rs 17,936.02 crore at present and not Rs 73,616 crore. The mention of “inclusive of taxes” in a media release for such a big acquisition is unheard of.
4. Whoever has drafted the viral message seems to have very shallow knowledge about Reliance Industries and its subsidiaries. The viral message reads, “With this trading of information the Federal Bank will be wholly-owned subsidiary of Reliance Jio Infocomm Ltd.”
Reliance Jio is a telecom company, and so, it is impossible in the current context in India for a telecom firm to acquire a bank.
5. The dateline mentioned in the viral release is September 13. Till now, we have not seen any announcement from SEBI or any credible media report on such a big acquisition, which would’ve surely made headlines.
We only found a couple of news reports from 2016 where it was reported that Federal Bank had signed an agreement with Reliance Jio Money for one-click payment service. Reliance Jio Money is a wallet application that will enable a Federal Bank customer to direct payment options.
Therefore, it is clear that the viral ‘media release’ claiming Reliance Jio is going to acquire Federal Bank is fake.
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