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Hinduja Group may request RBI extension for RCap transfer to IIHL

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In Short:

Hinduja Group’s IIHL is asking for a six-month extension from the RBI to take control of Reliance Capital. Parts of Reliance Capital will be transferred to subsidiaries IIHL BFSI and Aasia Enterprises LLP. IIHL needs IRDAI approval, which is pending due to concerns on insurance funding. Torrent Investment’s challenge to the auction for RCap resolution is also pending in the Supreme Court.

IndusInd International Holdings seeks extension for Reliance Capital control transfer

Hey there! Exciting news coming your way – Hinduja Group’s IndusInd International Holdings (IIHL) is gearing up to request a six-month extension from the Reserve Bank of India for the planned transfer of control of Reliance Capital, according to sources at businessline.

Transfer of Business

But wait, there’s more! Along with IIHL, segments of Reliance Capital’s business will be moved to its subsidiaries IIHL BFSI (India) Limited (IIHL BFSI) and Aasia Enterprises LLP (Aasia).

Deadline Extension

The extension is being sought because the completion of the resolution process is expected to span a few months, even though the current deadline for RBI’s approval is May 17.

IRDAI Approval Pending

Here’s a twist – as per the NCLT decree, IIHL must repay lenders within 90 days of the NCLT approval date…

Okay, gotcha! IIHL’s resolution plan was given the green light by NCLT on February 27 and has already garnered approvals from RBI and CII. However, the hitch remains – approval from insurance regulator IRDAI is still up in the air due to concerns related to insurance business funding.

IRDAI popped a letter over to the administrator of Reliance Capital on March 20, asking for details about IIHL’s proposed takeover and its insurance subsidiaries. The letter came after applications from the insurance subsidiaries and a series of meetings with the administrator starting October 2023.

IRDAI also requested details of all 600 shareholders of IIHL for due diligence, as well as info on the equity stake held by major shareholder groups. They also asked for specifics about the proposed structure of the insurance companies and entities involved, including the shareholding pattern and capital structure of the special purpose vehicles.

IRDAI plopped a curly one by saying, “Hey, there’s this other company wanting to snatch up all of RCL’s equity, making RCL a wholly owned subsidiary. Care to explain why this shouldn’t raise eyebrows?” They also threw in the question of why RCap should not be considered a special purpose vehicle if it continues as a holding company.

Meanwhile, the plot thickens – Torrent Investment’s plea challenging the second round of auction for the resolution of RCap is caught up in the Supreme Court. Tension rising, isn’t it?

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