NEW DELHI: The Reserve Bank of India (RBI) on Monday superseded the board of Anil Ambani’s Reliance Capital Ltd. (RCL) over defaults in payments and serious governance concerns and said that it will shortly initiate the process for resolution of the company under the insolvency and bankruptcy law.
The RBI said it has superseded the board, “in view of the defaults by RCL (Reliance Capital Ltd) in meeting the various payment obligations to its creditors and serious governance concerns which the board has not been able to address effectively”.
RBI has appointed former executive director of Bank of Maharashtra Nageswar Rao Y as the administrator of RCL. Accordingly, RBI will apply to the National Company Law Tribunal for appointing an administrator for the insolvency resolution.
The company was in financial trouble for a long time, with a ‘D’, or default rating.
As of March 31, 2021, the consolidated total assets stood at Rs 64,878 crore, as per the company’s annual report of 2021. Anil Ambani, who was once among the world’s top ten richest, declared bankrupt in the UK in 2020.
Already two of the companies under the RCL — Reliance Commercial Finance (RCF) and Reliance Home Finance (RHF) — are undergoing resolution under RBI’s prudential framework for resolution of stressed assets.
Authum Investment and Infrastructure has emerged as the successful bidder for both these firms. Experts claim this will not have any significant impact for the company or the sector.
“People were aware of the issues and RBI’s decision did not come as a surprise. Hopefully, this should expedite the resolution,” said Prakash Agarwal, Director & Head, Financial Institutions, Ind-Ra.
Prolonged tale of financial trouble