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IIHL has already received in-principal approval from the Reserve Bank of India (RBI) to raise its stake in IndusInd Bank
Ashok P Hinduja, chairman of IndusInd International Holdings Ltd
Ashok P Hinduja, Chairman of IndusInd International Holdings Ltd (IIHL), stated on March 18 that it is an ideal time for the company to increase its stake in IndusInd Bank. Hinduja expressed his intention, saying, “This is an opportune time as a promoter to increase stake. If this is the time at this price, we would like to increase stake,” during a press conference following the completion of IIHL’s acquisition of Reliance Capital.
He also stated that if necessary, the promoters are willing to inject capital into IndusInd Bank. However, at the present time, the bank’s capital adequacy level is satisfactory and there is no immediate requirement for additional funds.
IIHL has already received in-principal approval from the Reserve Bank of India (RBI) to raise its stake in IndusInd Bank from 15 per cent to 26 per cent. The company is now awaiting final approval from the RBI. Hinduja commented, “All communication responses have been given to the regulator. It is now left to the regulator when and how they will give us the approval.”
Earlier in March, IndusInd Bank’s management revealed that an internal review of its derivative portfolio had uncovered discrepancies related to ‘Other Asset and Other Liability’ accounts. The review was triggered by the implementation of an RBI circular, ‘Master Direction – Classification, Valuation and Operation of Investment Portfolio of Commercial Banks (Directions), 2023,’ which is set to come into effect on April 1, 2024. The discrepancies could negatively affect the bank, with its net worth potentially taking a 2.35 per cent hit, according to a March 10 stock exchange filing.
Hinduja assured that if IndusInd Bank requires additional capital, the promoters will step in to infuse funds. However, he emphasized that the bank does not need extra capital at this moment, and excess capital would be unnecessary.
PwC was appointed in late February to investigate the discrepancies in detail, and their findings are expected to be submitted to the RBI by the end of March. Hinduja stated that once the PwC report is received, it will be reviewed by the board and its committees, who will determine responsibility for the issues identified over the past years.
Regarding IIHL’s recent acquisition of Reliance Capital, Hinduja confirmed the deal’s completion on March 18. He stated, “As we are speaking now, the money must be going from one escrow to the other escrow account of the deal.” IIHL’s resolution plan for Reliance Capital was approved by the National Company Law Tribunal (NCLT) in February 2024. The acquisition gives IIHL control over 42 entities, including Reliance Nippon Life Insurance, Reliance General Insurance, Reliance Securities, and Reliance Asset Reconstruction.
The total cost of the acquisition is Rs 9,861 crore, financed by Rs 7,300 crore in debt from Barclays and 360 ONE, along with Rs 2,750 crore in equity. Additionally, IIHL has invested Rs 200 crore in Reliance General Insurance as capital.
Hinduja also shared plans to list Reliance Nippon Life Insurance and Reliance General Insurance in the next two years. While the promoter holding will remain unchanged until the listing, IIHL intends to stay invested in the asset reconstruction company, insurance companies, and securities business. However, it plans to exit from all other companies.
On Tuesday, Shares of IndusInd Bank Ltd closed at Rs 681.70, up by 0.70%.
