NEW DELHI: In a setback to the Hinduja Group, insurance regulator Insurance Regulatory and Development Authority of India (IRDAI) has objected to Reliance General Insurance’s (RGIC) proposal to transfer 25% equity of the company to Aasia Enterprises LLP, a Hinduja Group company.
The insurance regulator has termed the transfer premature as the entire shareholding of Reliance Capital in the RGIC is pledged in favour of IDBI Trusteeship Services Ltd (ITSL), and the matter is still pending before the Supreme Court.
The IRDAI has asked also RGIC to clarify the rationale for filing such an application with the insurance regulator, especially when NCLT approval on the resolution plan is pending and the matter is awaiting final disposal in the Supreme Court too.
IRDAI in a letter to the RGIC, according to sources, has said that the shares held by the transferor -- Reliance Capital (RCAP) are part of the corporate insolvency resolution process (CIRP) initiated against Reliance Capital.
Lenders of Reliance Capital had voted in favour of the resolution plan submitted by IIHL with a 99.6% vote share. As per IIHL’s resolution plan, the lenders will receive an upfront cash of Rs 9,661 crores from Hinduja group-backed successful resolution applicant. However, NCLT is yet to approve IIHL’s resolution plan.
Reliance Capital holds 100% equity in the Reliance General Insurance, the most valuable asset of its portfolio. The RGIC had filed an application with the IRDAI seeking its approval for transfer of Reliance Capital’s 25% equity in the company to Aasia Enterprise.
Earlier in October this year, the insurance regulator had rejected IIHL’s proposal to raise funds by pledging shares of Reliance General Insurance and Reliance Nippon Life Insurance. IRDAI had said no application for change in control would be considered favourably if the source of the funds for the acquisition contemplates creation of pledge over the shares of an insurance company.
IRDAI terms the transfer premature
The insurance regulator has termed the transfer premature as the entire shareholding of Reliance Capital in the RGIC is pledged in favour of IDBI Trusteeship Services Ltd (ITSL), and the matter is still pending before the Supreme Court.