The resolution of the Reliance Capital insolvency case led by Hinduja Group’s IIHL faces a setback as the Insurance Regulatory and Development Authority of India (IRDAI) rejects IIHL’s proposal to raise funds by pledging shares of Reliance General Insurance and Reliance Nippon Life Insurance. IRDAI’s rejection prompts the administrator to ask IIHL for a new application without creating pledges over the shares of the insurance arms. Hinduja Group had sought to raise $850 million in debt for the acquisition, and IRDAI’s approval is crucial for the successful resolution of Reliance Capital.