Reliance Capital has written to the Insurance Regualtory and Development Authority of India (IRDAI) explaining that prior approval for transfer of stake of the insurance arm was sought to avoid any delays in the resolution process, sources told businessline.
“RCap has written to IRDAI saying that the process runs parallely or concurrently so that once the NCLT approval comes in, all other approvals will already be in place and that timelines don’t get elongated further,” sources said.
Reliance Capital has been undergoing insolvency proceedings since December 2021, with the resolution process seeing several delays due to multiple rounds of auctions and ongoing legal proceedings initiated by the second bidder Torrent Investments.
IRDAI had sought clarity from Reliance General Insurance on the rationale for the application seeking permission to transfer the 25 per cent stake from Reliance Capital prior to receiving the go ahead from NCLT.
Reliance General Insurance had written to IRDAI on October 28, 2023 seeking prior-approval for transfer of 25.05 per cent equity capital of Reliance General Insurance from Reliance Capital to Aasia Enterprises LLP.
Aasia Enterprises is an India domiciled limited liability partnership (LLP) promoted by IndusInd International Holdings of the Hinduja Group.
businessline had on December 11 reported that pending the takeover of Reliance Capital by the Hinduja Group, the latter was looking to offload part of its stake in the general insurance arm to a domestic arm Aasia Enterprises to abide by regulatory norms on foreign ownership in the insurance sector.
Regulatory guidelines cap foreign ownership in Indian insurance companies at 74 per cent of the equity share capital. Currently, Reliance Capital holds 51 per cent stake in Reliance General Insurance whereas Nippon Life holds the remaining 49 per cent. Following the takeover of Reliance Capital by Hinduja Group, the foreign shareholding including both Nippon and IndusInd International will exceed 74 per cent, which is why Hinduja Group is looking to offload some part of the holding to its domestic arm.