According to news reports, Reliance General Insurance Company (RGIC) has requested an Rs600 crore capital infusion from its heavily indebted parent company Reliance Capital Ltd (RCL) to expand its operations in line with competitors. RGIC has asked for Rs600 crore in capital support by the end of this month in a letter to Reliance Capital's administrator.
Soon, according to the report, the Committee of Creditors (CoC) meeting will take up RGIC's request for a capital infusion.
Oaktree, Cosmea-Piramal consortium, Hinduja, and Torrent Group have all submitted binding offers for the resolution of RCL under the Insolvency and Bankruptcy Code (IBC).
According to RGIC, capital infusion is necessary to maintain the company's operations, increase value, and raise the solvency ratio from 155% to roughly 175%, according to reports.
Borderline solvency is producing commercial hesitation in corporate clients as well as government business, the letter issued by the top management of the general insurance firm claimed.
Competitors are also profiting from RGIC's precarious financial position, it was claimed.
The general insurer has informed the RCL administrator that, as a large format insurer, if it can pursue growth like most of its peers, it can benefit considerably from the current environment. However, this would require sufficient capital support.
The non-life company has about 7,000 employees and more than 70 lakh consumers.
The Reserve Bank of India (RBI) had on November 29 last year overridden the board of RCL in view of payment defaults and major governance concerns.
Nageswara Rao Y was chosen by the RBI to serve as the administrator for the company's Corporate Insolvency Resolution Process (CIRP).
The third significant non-banking financial institution (NBFC) against which the central bank has commenced insolvency proceedings under the IBC is Reliance Capital.For feedback and suggestions, write to us at firstname.lastname@example.org
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