Religare Enterprises’ plan to split into separate listed lending and insurance businesses has been stalled after the Reserve Bank of India declined approval, complicating the company’s strategic ambitions.
Religare Enterprises’ plan to separate its lending and insurance operations into two listed businesses has hit a fresh obstacle after the Reserve Bank of India declined to approve the restructuring, according to EquityPandit. The decision, communicated in writing on August 6 to Religare Enterprises and on August 7 to Religare Finvest, leaves the transaction on hold for now, even though the company had already cleared several other regulatory steps.
Under the proposed scheme, Religare would have shifted its lending, broking and other financial services businesses into Religare Finvest, while the parent would have kept its stake in Care Health Insurance. Shareholders were set to receive one share in Religare Finvest for each share they already owned in Religare Enterprises, creating two separately listed companies with distinct investor bases.
The RBI’s refusal was not explained in the letters disclosed so far. Religare said it intends to engage with the central bank and provide any clarifications it seeks. The setback comes after the National Stock Exchange and Bombay Stock Exchange gave their no-objection earlier, and the company’s board approved the restructuring in February.
The latest move also follows a confusing run of reports around the same plan. Moneycontrol and Business Standard said in mid-July that Religare had received RBI approval, while the company later disclosed that the central bank had instead declined the request. Separately, SEBI closed a long-running investigation into Religare at the end of July without imposing any penalty, removing one regulatory overhang even as the demerger itself remains unresolved.
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