It has been 90 days since the IIHL submitted the application to the DIPP, but approval is still pending. | Archive Photo
Lenders of debt-ridden Reliance Capital Ltd (RCAP) have alleged that Hinduja Group’s IIHL is resorting to delaying tactics, resulting in a slowdown in the implementation of the resolution plan.
Mauritius-based IndusInd International Holdings Ltd (IIHL) has emerged as a successful bidder for the acquisition of Reliance Capital.
On February 27, 2024, the Mumbai NCLT approved IIHL’s Rs 9,861 crore resolution plan for the debt-ridden financial firm.
According to sources, lenders said the IIHL’s decision to seek approval from the Department of Industrial Policy and Promotion (DIPP) is an afterthought.
It was not even part of the conditions laid down by the NCLT while approving the resolution plan on February 27, 2024.
A message to the IIHL seeking comment on the matter went unanswered as of the time of the news.
According to sources, 90 days have passed since the IIHL submitted the application to the DIPP, but approval is still pending.
DIPP approval is required as some of IIHL’s shareholders are residents of Hong Kong, a special administrative region controlled by China.
According to Press Note 3, if an entity from a nation that shares a land border with India (namely, China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar and Afghanistan), or if a citizen or permanent resident of any of those countries, is the beneficial owner of an investment in India, it must seek the investment through the government approval route.
On August 12, the National Company Law Tribunal (NCLT) directed the Reserve Bank of India (RBI) and the DIPP to expedite the approval process for implementing the resolution plan of RCAP by IIHL promoted by Hinduja Group.
Meanwhile, IIHL has agreed to pay the entire consideration of Rs 9,861 crore, subject to receipt of regulatory approvals and resolution of the pending GST component.
The next hearing of NCLT on the RCAP resolution plan is scheduled for September 19, 2024.
In November 2021, the RBI had superseded the board of Reliance Capital over governance issues and payment defaults by the Anil Dhirubhai Ambani Group company.
The central bank had appointed Nageswara Rao Y as administrator, who invited bids in February 2022 to take over the company.
Reliance Capital had a debt of over Rs 40,000 crore and four applicants had initially submitted bids with resolution plans. However, the committee of creditors rejected all four plans for lower bid values and a challenge mechanism was initiated involving IIHL and Torrent Investments.
First published: September 1, 2024 | 16:31 IS
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