Lenders Slam Hinduja’s IIHL for Delaying Reliance Capital Resolution Plan – NCLT Intervention Sought

Lenders to Reliance Capital Ltd (RCAP), a financially troubled company, have accused IndusInd International Holdings Ltd (IIHL), part of the Hinduja Group, of causing delays in implementing the approved resolution plan. IIHL, based in Mauritius, was selected as the successful bidder to acquire Reliance Capital.

On February 27, 2024, the National Company Law Tribunal (NCLT) in Mumbai approved IIHL’s resolution plan worth ₹9,861 crore. However, lenders claim that IIHL’s recent request for approval from the Department of Industrial Policy and Promotion (DIPP) is a last-minute move and was not a requirement set by the NCLT during its approval.

Sources reveal that 90 days have passed since IIHL submitted its application to the DIPP, with no approval yet. The delay is reportedly due to the fact that some IIHL shareholders are residents of Hong Kong, which is under China’s control. According to Indian regulations, any entity from a country sharing a land border with India, or with citizens or permanent residents of such countries as beneficial owners, must obtain government approval for investments.

On August 12, the NCLT instructed the Reserve Bank of India (RBI) and DIPP to speed up the approval process so that IIHL can implement the resolution plan for RCAP. IIHL has committed to paying the entire ₹9,861 crore, pending regulatory approvals and resolution of a Goods and Services Tax (GST) issue.

The next NCLT hearing on RCAP’s resolution plan is set for September 19, 2024.

In November 2021, the RBI took control of Reliance Capital due to governance issues and payment defaults by the Anil Dhirubhai Ambani Group company. Nageswara Rao Y was appointed as the administrator and invited bids in February 2022 to take over the company. Reliance Capital had a debt of over ₹40,000 crore, and initially, four bidders submitted plans. However, all four plans were rejected for being too low, leading to a challenge mechanism where IIHL and Torrent Investments participated.