Delays Threaten IIHL’s Acquisition of Reliance Capital Amid Regulatory Hurdles

Lenders to Reliance Capital Ltd have accused IndusInd International Holdings Ltd (IIHL) of delaying the resolution plan for the struggling financial firm. IIHL, which was approved to acquire Reliance Capital with a Rs 9,861-crore plan, has yet to receive necessary approval from the Department of Industrial Policy and Promotion (DIPP). This approval is needed because some IIHL shareholders are based in Hong Kong, which raises regulatory concerns. Despite the National Company Law Tribunal urging a faster approval process, 90 days have passed without resolution. The next hearing on the matter is set for September 19, 2024, following the Reserve Bank of India’s previous intervention over governance issues at Reliance Capital.

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Lenders of Reliance Capital Ltd, which is struggling with heavy debts, have accused IndusInd International Holdings Ltd (IIHL) of intentionally delaying the resolution plan. The Hinduja Group’s firm IIHL was selected as the winning bidder for Reliance Capital, having had their nearly Rs 9,861-crore resolution plan approved by the National Company Law Tribunal (NCLT) in Mumbai on February 27, 2024.

However, lenders say that IIHL’s recent application for approval from the Department of Industrial Policy and Promotion (DIPP) seems like an afterthought, not originally part of the conditions set by the NCLT. Ninety days have passed since IIHL submitted its application, and the DIPP’s approval is still pending. This delay is significant as some shareholders of IIHL are based in Hong Kong, which requires government approval for investment from countries sharing borders with India, including China and others.

In an earlier directive, the NCLT had urged the Reserve Bank of India (RBI) and the DIPP to speed up the approval process for the resolution plan. Meanwhile, IIHL has promised to pay the complete Rs 9,861 crore, but only after receiving the necessary regulatory approvals. The next NCLT hearing regarding Reliance Capital’s resolution plan is set for September 19, 2024.

In 2021, the RBI took over Reliance Capital’s board due to governance and payment issues, leading to the initiation of this resolution process. Initially, four applicants had submitted bids, but the creditors rejected them due to low valuations, prompting a competitive challenge that IIHL and Torrent Investments participated in.

With the pressing need for a resolution, the lenders and IIHL are keenly awaiting timely approvals to secure the future of Reliance Capital.

Tags: Reliance Capital, IIHL, NCLT, DIPP, Hinduja Group, investment approval, debt resolution, financial news

1. What is the issue between Reliance Capital and Hinduja’s IIHL?
   Reliance Capital accuses Hinduja’s IIHL of using delaying tactics in their business dealings, which is causing problems for lenders.

2. Why are lenders concerned about this situation?
   Lenders worry that delays can lead to financial losses and uncertainty, making it hard for them to recover their investments.

3. What are delaying tactics?
   Delaying tactics are actions taken by one party to slow down or stall a process, often to gain more time or an advantage.

4. How does this impact the loan agreements?
   If delays continue, it may affect the terms of loan agreements and the ability of lenders to get their money back on time.

5. What can lenders do about this issue?
   Lenders can discuss their concerns with legal advisors and consider taking action to ensure their interests are protected.