The companies are seeking approvals from the Reserve Bank of India (RBI).

Nippon Life Insurance (NLI) president Yoshinobu Tsutsui said: "Reliance Capital is planning to set up its own bank which will cater to individual customers and small and medium enterprises all over India.

"NLI is also participating in this bank project as part of strategic business alliance with a view to improve the financial infrastructure and contribute towards economic growth of India."

The announcement came during Indian Prime Minister Narendra Modi’s ongoing visit to Japan.

Tsutsui and Reliance Group managing director Amitabh Jhunjhunwala said in a joint statement that the need for bank loans in India is increasing while bank deposits are becoming popular due to economic growth and the rise of the middle income class.

"The Indian Government, through the Finance Ministry and the Reserve Bank of India, proposes to issue guidelines that will allow private corporations to establish various kind of banks so that the spread of the fundamental financial services in rural areas, through the financial inclusion mission, can be achieved."

Meanwhile, NLI’s Nissay Asset Management and Reliance Capital Asset Management have launched two new mutual funds, short-term Indian bond fund and India equity selection fund, for Japanese retail investors.

Image: Nippon Life Insurance headquarters in Chuo-ku, Osaka, Japan. Photo: courtesy of 663highland.