MUMBAI - The Reserve Bank of India (RBI) has approved the acquisition of Anil Ambani's debt-ridden Reliance Capital by IIHL BFSI (India), a subsidiary of the Hinduja Group. This move comes after IIHL emerged as the leading bidder with an offer of Rs 9,650 crore in April's auction.
Today, the RBI 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. The central bank also sanctioned the appointment of five board members from IndusInd to oversee the acquisition process.
This decision follows Friday's commencement of a six-month validity period for RBI's conditional agreement on IIHL's acquisition strategy. IIHL's resolution offer had previously received support from lenders; however, it 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 which also needs to be resolved as per the prerequisites set by the National Company Law Tribunal (NCLT) before their hearing on the case.
The 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 that began when RBI initiated insolvency proceedings in November 2021 due to payment defaults and governance issues at Reliance Capital. The company was placed under Corporate Insolvency Resolution Process (CIRP), and Nageswara Rao Y was appointed as the CIRP administrator by RBI at Mumbai's NCLT bench.
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