The Reserve Bank of India has granted its approval to Hinduja Group’s resolution plan for Reliance Capital (RCap), paving the way for the group’s takeover of the latter.

“We convey our no objection for the proposed transfer of control of Reliance Capital Limited, hereinafter called ‘the company’ to IIHL BFSI (India) Limited (wholly-owned subsidiary of resolution applicant viz. IndusInd International Holdings Ltd.),” RBI said in a letter to RCap as accessed by businessline.

“This no-objection is being granted on the condition that pursuant to change of control and management, the company shall maintain strict arm’s length distance with respect to any transaction with IndusInd Bank,” it added. Hinduja Group is also the promoter to private sector lender IndusInd Bank.

The central bank has also accorded its approval to Hinduja to appoint five directors on the board of RCap, subject to NCLT’s approval of the resolution plan.

Five representatives

The five representatives of the Hinduja Group, that have been approved by the RBI to act as directors, are Amar Chintopanth, Shardchandra V Zaregaonkar, Moses Newling Harding John, Bhumika Batra, and Arun Tiwari.

The central bank also said that any change in the shareholding of resolution applicant, after the implementation of the resolution plan, will be subject to prior approval of the central bank. It also directed RCap that a copy of the NCLT approval, once accorded, be submitted to the RBI.

NCLT hearing

“The NCLT hearing for the resolution plan is on November 29. The main objective of RBI’s approval has come in and NCLT has been informed,” a source told businessline.

The approval has been pending awaiting Supreme Court’s decision on Torrent Investment’s plea which contested the validity of the second auction held by the committee of creditors (CoC) of RCap, and Hinduja Group’s eligibility to participating in the second round.

The apex court is next scheduled to hear Torrent’s plea on November 21, according to sources.

The Hinduja Group is believed to have raised ₹8,000 crore of the required around ₹10,000 crore, by pledging shares of IndusInd Bank to fund RCap’s acquisition. Earlier, the group had proposed pledging against the shares of RCap’s insurance arms before the plan was rejected by the insurance regulator IRDAI.

“Pledging shares of the bank is one of the sources of fund raising. They are putting in place other sources and due diligence is going on. They are yet to submit the final plan to RCap,” a person in the know said, adding that the Hinduja Group will have 90 days from the NCLT approval to finalise the funding plan.