The Reserve Bank of India (RBI) has declined to approve the proposed demerger of Religare Enterprises Ltd (REL), under which a part of its business was to be transferred to subsidiary Religare Finvest Ltd (RFL), the company said in a stock exchange filing on Friday.
Following the RBI’s decision, Religare said both REL and RFL will engage with the regulator and provide any further clarifications that may be required.
In the filing, the company said it received a letter dated August 6 from the RBI stating that its application seeking the central bank’s no-objection/prior approval for the scheme “has been examined and that the request has not been acceded to”. RFL also received a similar communication from the RBI.
The proposed demerger had already received a no-objection from the National Stock Exchange (NSE) and an observation letter carrying “no adverse observations” from the BSE last month. The RBI’s approval was one of the key regulatory clearances required before the scheme could proceed further under the Companies Act and SEBI’s Listing Obligations and Disclosure Requirements (LODR) Regulations.
The restructuring proposal, cleared by the boards of REL and RFL in February, sought to separate Religare’s financial services businesses, including lending, broking and other financial services, into Religare Finvest, while REL would continue to hold its stake in Care Health Insurance.
The company had said the move was aimed at creating two independent listed entities with a sharper business focus and enabling shareholders to participate in both businesses through a one-for-one share allotment in RFL.