RBI Approves IIHL’s Acquisition of Reliance Capital with Conditions
RBI Approval for Acquisition of Reliance Capital
The Reserve Bank of India (RBI) has given its approval for the acquisition of Anil Ambani’s debt-ridden Reliance Capital by IIHL BFSI (India), a subsidiary of the Hinduja Group. This decision comes after IIHL emerged as the leading bidder with an offer of Rs 9,650 crore in April’s auction.
Conditions Set by RBI
Under the approval, the RBI has mandated that IIHL BFSI operate independently from its parent company, IIHL, and maintain arm’s length transactions with IndusInd Bank. Any adjustments to shareholding will require RBI approval, and the central bank has sanctioned the appointment of five board members from IndusInd to oversee the acquisition process.
Concerns from IRDAI
Despite receiving support from lenders, IIHL’s resolution offer still awaits approval from the Insurance Regulatory and Development Authority of India (IRDAI). The IRDAI has raised concerns over pledging shares of insurance affiliates, a matter that also needs to be resolved as per the prerequisites set by the National Company Law Tribunal (NCLT) before their hearing on the case.
Reliance Capital’s Confirmation
A regulatory filing released today by Reliance Capital confirmed RBI’s “No objection” to IIHL’s proposal, marking a significant step forward in the resolution process initiated when RBI initiated insolvency proceedings in November 2021 due to payment defaults and governance issues at Reliance Capital.
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