Reliance Capital to infuse Rs 200 cr into Reliance General Insurance by August end: Report

Reliance Capital Limited (RCap), which was formerly controlled by Anil Ambani, will reportedly infuse Rs 200 crore into its subsidiary Reliance General Insurance Company Limited (RGICL). Following the fund addition, the insurance company will raise an additional Rs 400 crore to fund its growth, which would be through tier-II funding.

Reliance Capital’s Committee of Creditors (CoC) has approved the Rs 200-crore capital infusion, which is likely to be made by the end of August, The Finance Express reported.

It is to be noted that earlier this month, Reliance Capital submitted an application for the resolution plan of IndusInd International Holdings Ltd (IIHL), the investment arm of the Hinduja Group, with the National Company Law Tribunal (NCLT).

The lenders will receive Rs 10,000 crore from IndusInd International Holdings, which includes an upfront payment of Rs 9,661 crore. Apart from the cash, IIHL – the sole bidder for RCap – had offered to infuse Rs 350 crore into RGICL.

It is to be noted RGICL, which is the third-largest private general insurance company, is also undergoing insolvency proceedings. Piramal Finance (Rs 4,000 crore), Zurich Insurance (Rs 3,500 crore) and US-based PE Advent International (Rs 7,000 crore) had placed bids for it. However, all of them later backed out.

In August last year, RGICL had asked for additional funding of Rs 600 crore from RCap, citing that it continues to lose business to rivals, and was impacted by “borderline” insolvency. It said that insolvency was creating hesitation among corporate clients, government businesses, and preventing it from placing tenders and forging partnerships.

RCap’s CoC had rejected the proposal, stating the firm was part of the bankruptcy proceedings.

In its request to the administrator, the insurance arm of RCap said the capital was required to pursue growth like most of its peers.

RCap is the third large non-banking financial company (NBFC) against which the central bank has initiated bankruptcy proceedings under the IBC. Kolkata-based Srei Group and Dewan Housing Finance Corporation (DHFL) were the other two.

The Reserve Bank of India (RBI) on November 29, 2021, superseded the board of Reliance Capital in view of payment defaults and serious governance issues.

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