Reliance Capital Urged To Meet May 27 Deadline for Debt Resolution - Details

Lenders of debt-laden Reliance Capital (RCAP) have urged IndusInd International Holdings Ltd, a Hinduja Group arm, to accelerate the process of securing necessary regulatory approvals and adhere to the May 27 deadline for the resolution plan. In a meeting held in Mumbai, lenders emphasized that RCAP must pay Rs 9,650 crore by the specified date.

According to the PTI report, the National Company Law Tribunal (NCLT) Mumbai sanctioned the resolution plan on February 27, instructing IndusInd International Holdings (IIHL) to implement it within 90 days, culminating on May 27. The approved plan mandates an upfront payment of Rs 9,650 crore to RCAP lenders.

The concerns have arisen due to sluggish progress in implementing RCAP's resolution plan, with IIHL awaiting crucial approval from the Insurance Regulatory and Development Authority of India (IRDAI). IRDAI has raised queries regarding the proposed corporate structure for transferring RCAP's insurance entities to IIHL, which remain unresolved.

Approval from IRDAI is pivotal for the transfer of Reliance Capital's insurance businesses, including Reliance General Insurance and Reliance Nippon Life Insurance, to IIHL. Additionally, the Reserve Bank of India (RBI) approval for the RCAP business transfer to IIHL expires on May 17. Originally granted on November 17, the approval had a six-month validity period.

If IIHL fail to meet the resolution timeline, it must provide reasons to the RBI when reapplying for fresh approval. The report added that the NCLT had earlier greenlit Hinduja Group's IIHL's Rs 9,650-crore resolution plan for Reliance Capital on February 27, 2024.

Reliance Capital faced governance issues and payment defaults, prompting the Reserve Bank to replace its board in November 2021. Nageswara Rao Y was appointed as administrator, who invited bids in February 2022. Despite initial bids from four applicants, all plans were rejected by the creditors for undervaluing RCAP. Following a challenge mechanism, IIHL and Torrent Investments entered the fray.

Reliance Capital's debt exceeded Rs 40,000 crore, making the resolution process critical for stakeholders involved.

(With Inputs From PTI Agency)