The Insurance Regulatory and Development Authority of India (IRDAI) has held that the pledge of transfer of shares of Reliance General Insurance Company Ltd (RGICL), a 100 per cent subsidiary of Reliance Capital, was in violation of the applicable provisions of law.
After the IRDAI direction, the 100 per cent shareholding RGICL stands restored to Reliance Capital.
IRDAI directed the trustee not to give effect to any encumbrance, transfer or any change in the shareholding of RGICL.
In November, the trustee had transferred Reliance Capital's 100 per cent shareholding in RGICL by invoking pledge which was being contested by the company.
"IRDAI ruling has protected the interest of all lenders and debenture holders of Reliance Capital," the company said in a statement. "This will now help Reliance Capital to monetise its stake in RGICL and to reduce its debt."
The sale of RGICL shares is expected to fetch Rs 6,000 crore for the Reliance Capital's lenders, which is almost 40 per cent of its total secured debt.
Reliance Capital, a part of the l Amb-led Reliance Group, has interests in life and general insurance, commercial and home finance, stock broking, wealth management services, distribution of financial products, asset reconstruction, proprietary investments and other activities in financial services
( With inputs from ANI )