IIHL, a holding company of Hinduja Group, is promoter of IndusInd Bank and a winning bidder of Reliance Capital.
The letter by RBI to Reliance Capital said that following the change of control and management, the company – IIHL BFSI (India) – shall maintain a ‘strict arm’s length distance’ with respect to any transaction with IndusInd Bank. The approval letter also states that the implementing company – IIHL BFSI (India) or the resolution applicant – IndusInd International Holdings- will have to seek RBI’s approval for any change in the shareholding.
The banking regulator also approved the appointment of five individuals recommended by IndusInd on the board of Reliance Capital, an erstwhile Anil Ambani financial services company it is preparing to acquire under the corporate insolvency process.These include Amar Chintopanth, Shardchandra Zaregaonkar, Moses Harding, Bhumika Batra and Arun Tiwari. Zaregaonkar and Harding have held senior positions with IndusInd Bank for several decades.The no objection granted will be valid for six months from the date of the letter from RBI (November 17), and if the company fails to implement the plan within the timeframe, it will have to apply again with the banking regulator.
Lenders have unanimously approved a resolution plan of Rs 9660 crore offered by IIHL for Reliance Capital- an RBI-registered core investment company.
The RBI-appointed administrator, Nageswara Rao Y, has filed an application with the National Company Law Tribunal to approve the IIHL plan. However, an approval from the Insurance Regulatory and Development Authority of India (IRDAI) is also pending.
The insurance regulator has objected to Hinduja group’s proposal to raise money by pledging shares of Reliance General Insurance and Reliance Nippon Life Insurance to acquire bankrupt Reliance Capital, as reported by ET on October 14. They have been asked to submit a revised plan. NCLT said it would hear the plan only after RBI and IRDAI approve it.