Piramal Enterprises not eligible to purchase Reliance Nippon Life due to insurance regulator restriction

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Piramal Enterprises is not fit to acquire Reliance Nippon Life Insurance, which is on the block as part of the debt-ridden Reliance Capital resolution process, due to the Irdai restriction. Piramal Enterprises is one of 54 Potential Requestors for Resolution (PRA) for Reliance Capital Ltd and its subsidiaries.

As per the guidelines of the Insurance Regulatory and Development Authority of India (Irdai), a promoter cannot hold a stake in more than one insurance company in the same segment. According to the provisions, an investor cannot individually hold more than 10% and jointly cannot hold more than 25% of the paid-up share capital of the insurance company.

According to this regulator provision, Piramal Enterprises may not be “fit and proper” to acquire Reliance Nippon Life Insurance, sources said, adding that it may, however, apply for non-insurance business from Reliance Capital. . Piramal Enterprises is a promoter of Pramerica Life Insurance Company as it holds a 20% indirect investment in Shriram Capital, which is the holding company of Shriram Life Insurance Company with a 74.56% stake.

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Bidders had two options – either they could bid for the whole of RCL or for one or more of Reliance Capital’s subsidiaries. Subsidiaries of Reliance Capital 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, replaced the board of directors of Reliance Capital Ltd (RCL) due to payment defaults and serious governance problems. He appointed Nageswara Rao Y as administrator in relation to the company’s Corporate Insolvency Resolution Process (CIRP).
The RBI then filed a CIRP application against the company at the Mumbai bench of the National Company Law Tribunal (NCLT). In February this year, the RBI-appointed administrator invited expressions of interest for the sale of Reliance Capital.

(Edited by : Anand Singha)

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