The Insurance Regulatory and Development Authority of India (IRDAI) has cancelled the enforcement of pledged shares of Reliance General Insurance Company Ltd (RGICL) by Credit Suisse and Nippon India Mutual Fund. The regulator has held that the move was in violation of law.
With this, the 100 per cent shareholding of Reliance Capital Ltd (RCap) in RGCIL stands restored. “IRDAI has directed the Trustee not to give effect to any encumbrance/transfer or any change in the Shareholding of the RGICL,” RCap said in a statement.
In November, the Trustee had transferred RCap’s 100 per cent shareholding in RGICL by invoking the pledge. This was contested by the Anil Ambani-group company.
“The IRDAI ruling has protected the interests of all lenders and debenture holders of RCap. This will now help RCap to monetise its stake in RGICL and reduce its debt. The company will continue its efforts to monetise its shareholding in RGICL as part of its overall plans for debt reduction,” RCap said.
According to industry sources, the IRDAI action will benefit all lenders of RCap as the sale proceeds of the RGIC shares will go to all lenders and not just Credit Suisse and Nippon MF. The sale of RGICL shares is expected to fetch ₹6,000 crore for lenders, which is almost 40 per cent of RCap’s total secured debt.
In September, CARE Ratings had downgraded RCap’s debt aggregating to ₹17,000 crore to default grade ‘D’ from ‘BB’. The rating revision took into account the delay in servicing of coupons on several NCDs by the company. In November, RCap had defaulted on interest and principal obligations on bonds due on November 15, 2019.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.