RBI clears Hinduja Group acquisition of Reliance Capital
19 Nov 2023
Reserve Bank of India (RBI) on Friday approved a Rs9,650 crore debt resolution plan submitted by IndusInd International Holdings Ltd (IIHL), allowing the Hinduja Group firm to take over the assets of Reliance Capital.
With an offer of Rs9,650, IIHL had emerged as the highest bidder to take over debt-ridden Reliance Capital in the second round of auction in April this year.
RCap’s lenders voted 99.6 per cent in favour of the resolution plan submitted by the Hinduja Group in June. The IIHL plan offered the lenders Rs10,000 crore, which included Rs9,661 crore of upfront cash.
In a regulatory filing, the administrator of Reliance Capital acknowledged the receipt of a `No objection’ letter from the Reserve Bank for the debt resolution plan.
Reliance Capital has been under RBI administration ever since the central bank suspended its board of directors on 29 November 2021, in the wake of payment defaults and serious governance issues.
RBI since appointed Y Nageswara Rao as the administrator in relation to the Corporate Insolvency Resolution Process (CIRP) of the firm.
RBI also instituted bankruptcy proceedings under the Insolvency and Bankruptcy Code (IBC) against Reliance Capital, subsequently filed an application for initiation of CIRP against the company at the Mumbai bench of the National Company Law Tribunal.
Reliance Capital was the third largest non-banking financial company (NBFC) in the country – the top two being Srei Group NBFC and Dewan Housing Finance Corporation (DHFL).
While RBI approval is a pre-requisite for Reliance Capital’s debt resolution, the process also needs approvals from the Insurance Regulatory and Development Authority of India (IRDAI), National Company Law Tribunal’s (NCLT) Mumbai bench and the Supreme Court for completion of the insolvency process.
This plan has to be approved by the NCLT, and since RCap has presence in insurance through its subsidiaries, the resolution plan also needed clearance from Insurance Regulatory and Development Authority of India (IRDAI).