The board of Reliance General Insurance Company (RGICL), a subsidiary of Reliance Capital, has agreed to withdraw its decision to make a bonus payment to its directors, following objections from the Reliance Capital’s central bank-appointed administrator.
The board, which met on Monday, decided to comply with the administrator’s directive, sources close to the development said.
Last week, the administrator raised objections to the insurer’s move to allot Rs 118 crore as one-time special payment to its management, saying this was a “blatant violation and breach” of its standing instructions’ and asked RGCIL to refrain from making any such payment. These payments would need prior approvals from the administrator or the committee of creditors (CoC), the administrator informed the firm’s management, sources said.
The one-time special pay is under deliberation between the successful resolution applicant IndusInd International Holdings, a Hinduja Group company, and the CoC, and until then, RGIC has been instructed to maintain the status quo.
The move to allot the payment is also contrary to RGICL’s representations on the solvency ratio after infusion of funds (Rs 200 crore). The management of RGICL has provisioned the amount as payment for quarter ended December 31, 2023.
The administrator has asked the management to reverse the decision, and sought for an undertaking from the board that no further steps would be taken in this regard.