India's Burman Family Secures RBI Nod for Religare Stake Increase

The Reserve Bank of India (RBI) has given the green light to the Burman family, owners of Dabur India Ltd, to proceed with an open offer to acquire an additional 26% stake in Religare Enterprises. This move, approved this week, comes with certain conditions, including maintaining the existing management structure and not appointing new directors at this stage. The RBI's approval is valid for one year.

The Burman family currently holds a 25% stake in Religare and had announced plans to acquire an additional 26% stake for Rs 2,116 crore under SEBI's Substantial Acquisition of Shares and Takeovers (SAST) guidelines in September 2023. This acquisition would increase their total stake in the New Delhi-based NBFC to well above 50%, effectively giving them majority control.

The open offer was triggered when the Burmans' equity stake in Religare crossed the 25% threshold, but it required multiple regulatory approvals given Religare's involvement in insurance and financial services. While the RBI's assent has been secured, approval from the Securities and Exchange Board of India (SEBI) is still pending. The Competition Commission of India (CCI) and the Insurance Regulatory and Development Authority of India (IRDA) have already approved the proposed open offer.

The Burman family's investment in Religare could potentially resolve the ongoing tussle for control of the company and strengthen its market position. However, with SEBI's approval still pending and the RBI's conditional nod emphasizing continuity in management, the process remains complex.

The Burman family's acquisition strategy, approved by the RBI, allows them to increase their stake in Religare Enterprises but comes with conditions. The RBI has emphasized maintaining the existing management structure and not appointing new directors at this stage. This implies that the Burman family will not be able to replace the current board immediately, which includes Executive Chairperson Rashmi Saluja. The family will need to submit names of proposed directors along with Board resolutions, ensuring they are 'fit and proper.' This condition preserves the current management structure while allowing the Burman family to gradually influence the board's composition.



The Reserve Bank of India's (RBI) approval for the Burman family's open offer to acquire an additional 26% stake in Religare Enterprises is a significant step towards the family's goal of gaining majority control of the company. This approval comes with conditions, including maintaining the existing management structure and not appointing new directors at this stage. The RBI's nod is crucial as Religare is involved in insurance and financial services, requiring multiple regulatory approvals. The Burman family currently holds a 25% stake in Religare and had announced plans to acquire an additional 26% stake for Rs 2,116 crore under SEBI's SAST guidelines in September 2023. The open offer was triggered when the Burmans' equity stake crossed the 25% threshold. While the RBI's assent has been secured, approval from the Securities and Exchange Board of India (SEBI) is still pending. The Competition Commission of India (CCI) and the Insurance Regulatory and Development Authority of India (IRDA) have already approved the proposed open offer. The Burman family's investment in Religare could potentially resolve the ongoing tussle for control of the company and strengthen its market position. However, with SEBI's approval still pending and the RBI's conditional nod emphasizing continuity in management, the process remains complex.