Anil Ambani
Anil Ambani, chairman of the Reliance Anil Dhirubhai Ambani Group, speaks during a news conference in Mumbai, India.

Reliance Capital, part of the Anil Dhirubhai Ambani Group (ADAG), said it has roped in Japanese financial powerhouses SumitomoMitsui Trust Bank and Nippon Life Insurance to boost its bid for a banking licence in India, where nearly half the population remains 'unbanked'.

Reliance Capital's move comes in the wake of tough competition for new banking licenses from several business conglomerates, including engineering major Larsen and Toubro and the Aditya Birla Group.

The Indian banking sector is dominated by state-run banks. The country has not granted any new licences for five years now. Yes Bank was the last to get a banking licence from Reserve Bank of India in 2004.

The deadline to turn in applications is 1 July, 2013.

Tough competition, alongside restrictions on setting up branches have forced foreign firms to keep their distance from consumer banking in India.

Swiss financial services major UBS surrendered its banking licence on 21 June, after struggling to expand beyond its sole branch in India's financial capital Mumbai. The UBS decision follows similar moves by American banks Morgan Stanley and Goldman Sachs.

Barring New-York headquartered Citigroup, Wall Street banks such as JPMorgan and Bank of America Merrill Lynch have kept their distance from consumer banking in India

Earlier this week, Mahindra Financial Services, part of the larger Mahindra group, dropped plans to acquire a banking licence citing unfair rules.

Reliance Capital proposes to form a new entity in which both Japanese partners will hold a 5% stake each at a substantial premium, the Economic Times reported on Wednesday.

"The broad contours of the deal between Reliance Capital and the two potential investors have almost been finalised, and an announcement is expected shortly," the newspaper quoted an unnamed official as saying.

SumitomoMitsui Trust Bank, one of Japan's top five commercial banks, will partner with the Anil Ambani Group for the first time when this deal is concluded.

Nippon Life Insurance or Nissay has invested in the group twice before. In 2011, Nissay picked up a 26% stake in Reliance Life Insurance. The following year, it purchased a 26% stake in Reliance Asset Management Company.