The deal valued One97, which owns and operates India's No. 1 digital wallet Paytm, at about $5 billion, the source said, without giving further details.
Spokeswomen for Reliance Capital and One97 declined to comment. Alibaba was not immediately reachable for comment.
Alibaba and its associates own the biggest chunk of shares in One97, which also runs the Paytm e-commerce marketplace.
Reliance Capital, controlled by billionaire Anil Ambani, had bought the stake in One97 for Rs 10 crore, according to its annual report.
Reliance Capital will continue to own some shares in Paytm E-Commerce Pvt Ltd, the digital goods marketplace company, the source said.
Paytm E-Commerce recently raised $200 million from Alibaba and venture capital fund SAIF Partners.
($1 = Rs 66.6650)