Shares of Reliance Capital jumped 5 percent in intra-day trading on Monday after the company informed stock exchanges that the IRDAI had cancelled the pledge enforcement of shares of Reliance General Insurance by Credit Suisse and Nippon India Mutual Fund. The insurance regulator has held that the move was in violation of the law.
Following this news, the scrip jumped 4.85 percent to hit a high of Rs 14.05 on the Bombay Stock Exchange (BSE).
On 27 December, the Insurance Regulatory and Development Authority of India (IRDAI), had held that the pledge/transfer of shares of Reliance General Insurance Company Limited (RGICL), a 100 percent subsidiary of Reliance Capital Limited (RCAP), was in violation of the applicable provisions of law, the company stated in a filing to the BSE.
Following this order, the 100 percent shareholding in RGICL was restored to RCAP, the company said.
Reliance Capital stated that the IRDAI directed the trustee not to give effect to any encumbrance/transfer or any change in the shareholding of the RGICL.
In November 2019, the trustee had transferred RCAP’s 100 percent shareholding in RGIC by invoking the enforcement pledge, which was contested by the company.
The IRDAI ruling has protected the interest of all lenders and debenture holders of RCAP, a part of the Reliance Group. This will now help RCAP to monetise its stake in RGIC and to reduce its debt, the statement said.
The company will continue its efforts to monetise its shareholding in RGICL as part of its overall plans for debt reduction.
The IRDAI directed IDBI Trusteeship Services (Trustee) not to give effect to any encumbrance or transfer or any change in the shareholding of the general insurance firm, the company statement said.
IRDA said that the enforcement of pledge is null and void, and not in accordance with law. The insurance regulator said its prior approval was not taken for the transfer.
Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.
Updated Date: Dec 30, 2019 14:48:52 IST