This is an interesting problem. It's making me think.
@Kaushik, you are correct that the centripetal force on differential element of mass, dm is
dF = (dm) \omega^2 r
(Same thing as dF = dm \frac{v^2}{r})
But the thousand dollar question is, "Is that the same as the tension?"
And the answer is "no," at least not according to my calculations. But fortunately, they are related.
While I won't tell you what that tention is, I'll explain
how I found a formula for the tension.
Instead of the ring being a continuous band, model it as 4 pieces of mass, each with mass M/4, held together by massless strings. The four masses are rotating around their center with angular velocity \omega.
Calculate the centripital force on one of the masses. You know that that force must come from the the two strings (one on either side): Specifically, the component of the tensions that are directed toward the center. You can then use algebra to solve for the tension, T.
Now move on to more masses. For example, 5 masses. Do the same thing. The two things that change is the individual mass is now smaller (M/5 instead of M/4), and the angle becomes smaller too. Look for a pattern here.
Now try to find the formula for the tension T for a system of n masses.
Once you have a formula for the tension with n masses, take the limit as n \rightarrow \infty.
The result should be rather pleasing, although not too terribly surprising.
[Edit: Hint: although I used degrees to represent the angles in the above figures, you might find it advantagous to use radians.]