NEW DELHI: The Reserve bank of India on Monday said it had superseded the board of directors of Srei Infrastructure Finance Ltd and Srei Equipment Finance Limited over governance issue and defaults and said will soon initiate bankruptcy proceedings against these two non-banking finance companies (NBFCs).
“The Reserve Bank has today superseded the board of directors of SIFL and SEFL, owing to governance concerns and defaults by the aforesaid companies in meeting their various payment obligations,” the RBI said in a statement on Monday.
It has appointed Rajneesh Sharma, ex-chief general manager of Bank of Baroda, as the administrator of the Kolkata-based financial companies.
“The Reserve Bank also intends to shortly initiate the process of resolution of the above two NBFCs under the Insolvency and Bankruptcy Rules, 2019 and would also apply to the NCLT for appointing the administrator as the Insolvency Resolution Professional,” the RBI statement said.
Reserve Bank of India also appointed an advisory committee to advise the administrator of Srei Infrastructure Finance Limited (SIFL) and Srei Equipment Finance Limited (SEFL), the apex bank said.
The members of the advisory committee include R Subramaniakumar, former MD & CEO, Indian Overseas Bank, TT Srinivasaraghavan, former managing director, Sundaram Finance, and Farokh N Subedar, former COO and Company Secretary, Tata Sons, the RBI said.
As per analysts’ estimates, banks have exposure of over Rs 35,000 crore to the SREI group.
Last week, a consortium of lenders led by UCO Bank sought central bank directions on pursuing recovery of dues from the Srei Group after loans worth about Rs 30,000 crore was identified as non-performing assets (NPA) this quarter.
Axis Bank, PNB, SBI and Union Bank of India are other lenders to Srei Group.
The company was already under stress for over the last one and half years.
In November 2020, the RBI had initiated an audit of its books and had identified certain borrowers with loans worth Rs 8,576 crore as connected or related parties.
To initiate bankruptcy process under IBC
The RBI also intends to shortly initiate the process of resolution of the two NBFCs and would apply to the NCLT for appointing the administrator as the Insolvency Resolution Professional.