Piramal Enterprises not eligible to buy Reliance Nippon Life due to Irdai restriction
The bidders had two options - either they could bid for the entire RCL or any one or more than one of the subsidiaries of Reliance Capital. The Reserve Bank of India RBI had on November 29 last year superseded the board of Reliance Capital Ltd RCL in view of payment defaults and serious governance issues.
Piramal Enterprises is one of the 54 prospective resolution applicants (PRAs) for Reliance Capital Ltd and its subsidiaries.
As per the Insurance Regulatory and Development Authority of India (Irdai) guidelines, a promoter cannot have a stake in more than one insurance company in the same segment.
As per the provisions, an investor individually cannot hold more than 10 per cent and jointly could not hold more than 25 per cent paid-up equity share capital of the insurance company.
Going by this provision of the regulator, Piramal Enterprises may be a fit and proper to acquire Reliance Nippon Life Insurance, sources said, adding it can, however, apply for other than insurance businesses of Reliance Capital.
Piramal Enterprises is a promoter of the Pramerica Life Insurance Company while it has an indirect investment of 20 per cent in Shriram Capital, which is the holding company of Shriram Life Insurance Company with a 74.56 per cent stake. The bidders had two options - either they could bid for the entire RCL or any one or more than one of the subsidiaries of Reliance Capital. Reliance Capital's subsidiaries include Reliance General Insurance, Reliance Nippon Life Insurance, Reliance Securities, Reliance Asset Reconstruction Company, Reliance Home Finance and Reliance Commercial Finance. The Reserve Bank of India (RBI) had on November 29 last year superseded the board of Reliance Capital Ltd (RCL) in view of payment defaults and serious governance issues. It appointed Nageswara Rao Y as the administrator in relation to the Corporate Insolvency Resolution Process (CIRP) of the company.
This is the third large non-banking financial company (NBFC) against which the central bank has initiated bankruptcy proceedings under IBC (Insolvency and Bankruptcy Code) recently.
In February this year, the RBI-appointed administrator invited expressions of interest for the sale of Reliance Capital.
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)
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- Reliance Capital
- Shriram Capital
- Reliance General Insurance
- Srei Group
- Insurance Regulatory and Development Authority of India
- Nageswara Rao Y
- Reliance Capital Ltd
- National Company Law Tribunal
- Life Insurance
- Reliance Asset Reconstruction Company
- Reliance Nippon
- Reliance Home Finance
- Reliance Securities
- Reliance Commercial Finance
- Dewan Housing Finance Corporation
- Shriram Life Insurance Company