Mumbai, October 4 (PTI) After the IL&FS crisis, Srei is the second company whose two NBFCs have been sued by the Reserve Bank for non-repayment of their debts and will soon be brought before the NCLT for resolution of corporate insolvency under the IBC.
The crisis-stricken DHFL was the first NBFC to have its board replaced by the Reserve Bank. He later went through the corporate insolvency resolution process which was successfully resolved with Piramal Capital and Housing Finance Ltd acquiring the troubled housing finance company after paying creditors Rs 34,250 crore.
On Monday, the RBI replaced the board of directors of Srei Infrastructure Finance Limited (SIFL) and Srei Equipment Finance Limited (SEFL), due to governance issues and their breaches of their various payment obligations.
The RBI also appointed Rajneesh Sharma, former CGM of Bank of Baroda, as a director to manage the affairs of the two companies.
The Srei group owes around Rs 18,000 crore to around 15 lenders, including Axis Bank, UCO Bank and State Bank of India, and nearly Rs 10,000 crore in external commercial loans and bonds.
Meanwhile, SIFL said it was “shocked” by the RBI’s decision, as banks regularly appropriate funds from the escrow account they have controlled since November 2020.
In October 2018, the government took control of debt-trapped IL & FS and replaced its board of directors with a board headed by banker Uday Kotak. This is only the second time after Satyam Computer Services Ltd that the government has taken control of a board of directors. The government in 2009 replaced the board of directors of Satyam.
IL&FS Group, which had assets of Rs 1.15 lakh crore, was facing enormous debt pressure and was struggling to repay around Rs 91,000 crore in debt.
In November 2019, the Reserve Bank replaced DHFL’s board of directors due to governance issues and DHFL’s defaults in meeting various payment obligations. It was the first financial firm to be referred to NCLT by the RBI using special powers under Section 227 of the IBC.
The RBI had referred DHFL – then the third-largest pure-play mortgage lender – for resolution under the Code.
It was the first financial firm to be referred to NCLT by the RBI using special powers under Section 227 of the IBC.
DHFL had gone bankrupt with more than Rs 90,000 crore in debt to various lenders, including banks, mutual funds and individual investors who kept term deposits with the company.
The RBI has also taken action against banks, including cooperative banks, against poor financial health in its attempt to protect interest depositors and stakeholders.
In March last year, the central bank replaced the board of directors of the capital-strapped Yes Bank after a moratorium was imposed on the private sector lender by the government.
The board of directors of the Punjab and Maharashtra Cooperative (PMC) Bank was seized by the RBI in September 2019 and imposed various regulatory restrictions on it after the detection of certain financial irregularities, concealment and false declaration of loans granted to property developer HDIL.
The board of directors of another private sector lender, Lakshmi Vilas Bank, was replaced by the RBI last November after being placed under moratorium by the central government. The crisis-hit lender was later merged with the Indian branch of Singapore-based DBS Bank. PTI NKD CS MKJ
Disclaimer: – This story has not been edited by Outlook staff and is auto-generated from news agency feeds. Source: PTI