Assurance by Reliance To Receive a Capital Infusion of Rs 200 Cr from Reliance Capital
According to reports, Reliance Capital’s (RCAP) lenders have authorized the capital injection into Reliance General Insurance to increase the general insurance arm’s solvency buffer.
They predicted that the capital injection will take place by the end of August.
After receiving funding from RCAP, Reliance General Insurance would seek an additional Rs 400 crore in Tier 2 capital to spur expansion, according to sources.
The investment in Reliance General occurs at a time when the Committee of Creditors (CoC) has unanimously voted to support the Resolution Plan of IndusInd International Holdings Ltd (IIHL), a Hinduja Group company.
The IIHL’s resolution strategy is anticipated to bring in Rs 10,000 crore for the lenders. The IIHL resolution plan has also been submitted to the NCLT for approval by the RCAP administrator.
Reliance General Insurance had already requested the capital injection from the CoC on many occasions.
Reliance Capital was asked for a Rs 600 crore capital injection by the general insurer earlier this year, but the CoC rejected the request.
Reliance General had said that the delay in Reliance Capital’s resolution procedure was severely stressing its operations and that the firm urgently needed a capital injection of Rs 600 crore from Reliance Capital to strengthen its solvency position.
The firm claimed that rivals were taking advantage of corporate customers, government agencies, tenders, and important retail and bancassurance relationships due to the company’s precarious financial position.
According to RGIC, capital injection will provide expansion capital in pace with the above 20% growth of the private sector.
The most valuable industry segment is represented by Reliance Capital Ltd’s general insurance subsidiary and Reliance Nippon Life Insurance Company Ltd (RNLIC).
According to insiders, the new funding would boost IRDAI’s regulatory confidence while also showing the promoter company’s ongoing support.
