A committee of creditors of Reliance Capital has approved infusing Rs 200 crore in the bankrupt company’s profit-making subsidiary, Reliance General Insurance.
The capital infusion is likely to happen by August, said a banking source.
After the infusion, Reliance General Insurance will separately raise an additional Rs 400 crore as tier-two capital to accelerate growth.
The committee earlier approved the Hinduja Group’s resolution plan to acquire Reliance Capital and is awaiting a court's permission.
Lenders will receive Rs 10,000 crore from the Hinduja Group as upfront cash, if the court clears the conglomerate’s plan.
Reliance General Insurance had earlier sought Rs 600 crore as capital infusion from Reliance Capital to meet its solvency requirements, but lenders had rejected the demand.
Reliance General Insurance Company Limited (RGICL) is Reliance Capital’s most valuable business vertical, along with Reliance Nippon Life Insurance Company (RNLIC).
RGICL has told banks that fresh fund infusion will increase regulatory comfort at the Insurance Regulatory and Development Authority of India (IRDAI) and also reflect continued support by the promoter company.