Reliance Capital's resolution plan gets RBI nod

The Reserve Bank of India (RBI) on Friday approved the resolution plan for debt-ridden Reliance Capital, marking a major development in the company's financial restructuring. 

The approved plan sets the stage for IndusInd International Holdings Ltd (IIHL), a Hinduja Group entity, to acquire Reliance Capital.

Reliance Capital, facing financial challenges and governance issues, had its board superseded by the RBI on November 29, 2021. In response to payment defaults, the central bank initiated the Corporate Insolvency Resolution Process (CIRP) and appointed Nageswara Rao Y as the administrator.

In a regulatory filing, Reliance Capital disclosed that it received a "No objection" from the RBI on November 17, 2023, signalling approval for the resolution plan.

IIHL emerged as the top bidder in the second round of the auction held in April, offering Rs 9,650 crore to take over the beleaguered financial entity.

Reliance Capital becomes the third major non-banking financial company (NBFC) to undergo insolvency proceedings under the Insolvency and Bankruptcy Code (IBC), following Srei Group NBFC and Dewan Housing Finance Corporation (DHFL). 

The RBI, through the Mumbai bench of the National Company Law Tribunal, had filed an application for the initiation of CIRP against Reliance Capital after the administrator invited expressions of interest for its sale in February of the previous year.

(With PTI Inputsa)