Mumbai, Dec 8 (IANS): Reliance General Insurance Company Ltd. (RGICL) has sought Rs 600 crore capital infusion from Reliance Capital on an urgent basis.
In a letter to the Reliance Capital Administrator, RGIC has sought Rs 600 crore capital support from the RCAP by December 31, 2022.
The Committee of Creditors (COC) is expected to consider and discuss RGIC's request for capital infusion in December 9 meeting.
The company has said that the fund infusion is essential to preserve the business, enhance the value and take the company's solvency from 155 per cent to about 175 per cent.
The company says that borderline solvency is creating business hesitation in corporate clients, Government business tenders, and key retail and bank partnerships.
The borderline solvency of RGIC is also being capitalized on by its competitors.
Reliance General Insurance believes that the capital infusion from the existing stakeholders of the company will send a strong message of support to the market, and will allow it to outperform the market growth rate.
It will also augment value creation and negate the risk of underperforming the broader markets.
The company believes that fresh fund infusion will not only increase regulatory comfort at IRDAI but will also reflect continued support by the promoter company.
The company has told the RCAP Administrator that RGIC, as a large format insurer, can gain significantly in the current ecosystem if it can pursue growth like most of its peer competitors, but that would require adequate capital support from the RCAP.