RBI Approves Resolution Plan for Reliance Capital; IIHL to Acquire Company

The Reserve Bank of India (RBI) on Friday, November 17, 2023, approved the resolution plan for debt-ridden Reliance Capital. The move paves the way for IndusInd International Holdings Ltd (IIHL), the Hinduja Group firm, to acquire the company.

Reliance Capital is a non-banking financial company (NBFC) that was founded in 1986. The company provides a range of financial services, including loans, insurance, and asset management. In recent years, Reliance Capital has been facing financial difficulties and has been unable to repay its debts. In November 2021, the RBI superseded the board of Reliance Capital and appointed an administrator to oversee the company's operations.

Resolution Plan

In April 2023, IIHL emerged as the highest bidder for Reliance Capital in a second round of auction. The company offered to pay Rs 9,650 crore to acquire Reliance Capital. The RBI has now approved the resolution plan, which will allow IIHL to take over the company.

Significance

The approval of the resolution plan for Reliance Capital is a significant development in the Indian financial sector. It marks the third time that the RBI has initiated bankruptcy proceedings against a large NBFC under the Insolvency and Bankruptcy Code (IBC). The resolution plan will help to protect the interests of Reliance Capital's creditors and depositors and will also help to stabilize the Indian financial system.

The approval of the resolution plan for Reliance Capital is a positive step forward for the Indian financial sector. It demonstrates the RBI's commitment to resolving the problems of stressed NBFCs and protecting the interests of creditors and depositors. The acquisition of Reliance Capital by IIHL will also help to strengthen the Hinduja Group's financial services business.