Piramal Enterprises not fit for Rel Nippon Life buyout

New Delhi: Piramal Enterprises is not fit to acquire Reliance Nippon Life Insurance, which is on the block as part of the resolution process of debt-ridden Reliance Capital, due to Irdai restriction. Piramal Enterprises is one of the 54 prospective resolution applicants (PRAs) for Reliance Capital Ltd and its subsidiaries.

As per the Insurance Regulatory and Development Authority of India (Irdai) guidelines, a promoter can't have a stake in more than one insurance company in the same segment. As per the provisions, an investor individually can't hold more than 10 per cent and jointly could not hold more than 25 per cent paid-up equity share capital of the insurance company. Going by this provision of the regulator, Piramal Enterprises may not be 'fit and proper' to acquire Reliance Nippon Life Insurance, sources said, adding it can, however, apply for other than insurance businesses of Reliance Capital.

Piramal Enterprises is a promoter of the Pramerica Life Insurance Company while it has an indirect investment of 20 per cent in Shriram Capital, which is the holding company of Shriram Life Insurance Company with a 74.56 per cent stake. The bidders had two options - either they could bid for the entire RCL or any one or more than one of the subsidiaries of Reliance Capital. Reliance Capital's subsidiaries include Reliance General Insurance, Reliance Nippon Life Insurance, Reliance Securities, Reliance Asset Reconstruction Company, Reliance Home Finance and Reliance Commercial Finance.