The Reserve Bank of India (RBI) has ordered separation between Hinduja Group-run IndusInd Bank Ltd and Reliance Capital – the debt-laden company it is taking over in insolvency proceedings.
Citing the central bank’s November 17 letter, sources said the RBI had set this condition while approving the appointment of five Hinduja Group representatives as directors on the board of Reliance Capital.
Hinduja group company IndusInd International Holdings Ltd (IIHL) had emerged as the highest bidder for Reliance Capital in the insolvency proceedings to recover unpaid loans. IIHL had offered Rs 9,650 crore to acquire Reliance Capital in the second round of auction held in April.
RBI, in its letter dated November 17, expressed no objection to the transfer of control of Reliance Capital Limited to IIHL BFSI (India) Limited (a wholly owned subsidiary of IndusInd International Holdings Limited).
It also approved the appointment of Amar Chintapanth, Sharadchandra V Zaregaonkar, Moses Newling Harding John, Bhumika Batra and Arun Tiwari as directors on the Reliance Capital board, sources said.
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Citing the central bank’s letter, he said the no-objection is being given on the condition that as per the change in control and management, the company will maintain a strict distance in respect of any transactions with IndusInd Bank Limited.
RBI also stipulated that any change in shareholding after the acquisition would be subject to the prior approval of the central bank.
RBI has also directed that a copy of the NCLT order approving the resolution plan of IIHL has to be submitted to the bank.
NCLT’s approval on IIHL’s resolution plan is still pending as the Supreme Court is yet to decide on Torrent Investment’s plea against the second round of auction conducted by Reliance Capital’s lenders.
Torrent’s petition is to be heard in the Supreme Court on Tuesday.
(This report has been published as part of an auto-generated syndicated wire feed. Apart from the headline, there have been no edits to the copy by ABP Live.)