The Reserve Bank of India (RBI) has ordered an arm's length distance between IndusInd Bank Ltd, run by the Hinduja group, and Reliance Capital, the debt-laden company the conglomerate is acquiring in insolvency proceedings.
The RBI laid down the condition while giving its nod to the appointment of five Hinduja Group representatives as directors on the board of directors of Reliance Capital, sources said citing the central bank's November 17 letter.
Hinduja Group company IndusInd International Holdings Ltd (IIHL) had emerged as the highest bidder for Reliance Capital in an insolvency proceeding to recover unpaid loans. IIHL had made a bid of Rs 9,650 crore to take over Reliance Capital in the second round of auction concluded in April.
In the letter dated November 17, the RBI conveyed its no objection to the transfer of control of Reliance Capital Ltd to IIHL BFSI (India) Ltd (wholly owned subsidiary of IndusInd International Holdings Ltd).
He also approved the appointment of Amar Chintopanth, Shardchandra V Zaregaonkar, Moses Newling Harding John, Bhumika Batra and Arun Tiwari as directors on the board of Reliance Capital, sources said.
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The no-objection was granted on the condition that in accordance with the change in control and management, the company maintains a strict arm's length distance in respect of any transaction with IndusInd Bank Ltd, they said citing the central bank's letter.
The RBI also stipulated that any change in shareholding, after the acquisition, will be subject to prior approval of the central bank.
The RBI has also directed that a copy of the NCLT order approving the IIHL resolution plan must be submitted to the bank.
The NCLT's approval on the IIHL resolution plan is still pending as the Supreme Court is yet to decide on Torrent Investment's appeal against the second round of auction held by Reliance Capital's lenders.
A hearing on Torrent's statement before the Supreme Court is scheduled for Tuesday.
(This report has been published as part of the automatically generated union feed. Other than the headline, ABP Live has not made any edits to the copy.)
