Reliance Capital on Sunday said the Insurance Regulatory and Development Authority of India has cancelled pledge enforcement of Reliance General Insurance Company Ltd's (RGICL) shares by Credit Suisse and Nippon India MF.
Insurance regulator Irdai has directed IDBI Trusteeship Services not to give effect to any encumbrance or transfer or any change in the shareholding of RGICL, according to a BSE filing by Reliance Capital (RCAP).
Pursuant to the Irdai direction, 100 per cent shareholding in RGICL stands restored to RCAP, it added. The regulator also said its prior approval was not taken for the transfer. The Irdai added that the unauthorised transfer also violates FDI regulations.
The Irdai action will benefit all lenders of Reliance Capital as sale proceeds of RGICL's shares will go to all lenders and not just Credit Suisse and Nippon India MF.
The sale of RGICL's shares is expected to fetch Rs 6,000 crore for RCAP lenders, which is almost 40 per cent of the total RCAP secured debt.
The 100 per cent shareholding of RGICL is held by Reliance Capital. In November 2019, the IDBI Trusteeship had transferred RCAP's 100 per cent shareholding in RGIC by invoking pledge, which was contested by the company, RCap said in a statement.
The company will continue with its efforts to monetise its shareholding in RGICL as part of its overall plan for debt reduction, the statement added.
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