New Delhi, Nov 20 (The Street Press India) – The RBI has directed a fair distance between IndusInd Bank Ltd, managed by the Hinduja group, and Reliance Capital, the company they are acquiring due to insolvency. This move aims to ensure a proper separation between the two entities.
The RBI set this condition when approving the appointment of five Hinduja Group representatives as directors on Reliance Capital’s board, as per sources referring to the central bank’s letter dated November 17.
In the insolvency process to recover unpaid loans, Hinduja Group’s IndusInd International Holdings Ltd (IIHL) emerged as the top bidder for Reliance Capital. In the April auction’s second round, IIHL proposed a takeover amount of Rs 9,650 crore.
In a letter dated November 17, the RBI expressed no objection to the transfer of control of Reliance Capital Ltd to IIHL BFSI (India) Ltd, which is a wholly owned subsidiary of IndusInd International Holdings Ltd.
The RBI also granted approval for the appointment of Amar Chintopanth, Shardchandra V Zaregaonkar, Moses Newling Harding John, Bhumika Batra, and Arun Tiwari as directors on the board of Reliance Capital, according to sources.
The no-objection was granted with the condition that, following the change of control and management, the company must maintain a clear arm’s length distance in any transactions with IndusInd Bank Ltd, as per information from the central bank’s letter.
Additionally, the RBI specified that any alteration in shareholding after the takeover will require prior approval from the central bank.
The RBI has instructed that a copy of the NCLT order approving IIHL’s resolution plan must be submitted to the bank.
The NCLT approval for IIHL’s resolution plan is pending, awaiting a decision from the Supreme Court on Torrent Investment’s plea against the second round of auction conducted by Reliance Capital’s lenders.
The Supreme Court is set to hold a hearing on Tuesday regarding Torrent’s plea.