New Delhi: Reserve Bank of India (RBI) On Monday, it said it has superseded the boards of non-banking financial companies Srei Infrastructure Finance Ltd (SIFL) and Srei Equipment Finance Ltd (SEFL) due to governance concerns and defaults. The central bank said it would initiate bankruptcy proceedings against the companies.
“The Reserve Bank has today superseded the Board of Directors of SIFL and SEFL on account of defaults and defaults by the aforesaid companies in meeting their various payment obligations,” RBI said in a notification.
“RBI intends to initiate the process of resolution of the above two NBFCs under the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 and will also be applicable to NCLT (National Company) Law Tribunal) to appoint the Administrator as Insolvency Resolution Professional,” it further said.
The central bank’s notification also said that former chief general manager of Bank of Baroda, Rajnish Sharma, has been appointed as the administrator of non-banking financial companies.
The Srei group owes around Rs 18,000 crore to about 15 lenders.
Srei said its total liabilities are bank loans of around Rs 18,000 crore, and another around Rs 10,000 crore are external commercial borrowings and bonds. Realizable assets, including arbitration awards, are high.
The NBFC has been grappling with a human resource crunch since December last year, with around 230-250 people leaving the Srei group, as the economic crisis induced by the pandemic created an asset-liability mismatch.
Srei Group mainly deals in MSME and infrastructure sector.
Shares of Srei Infra closed at Rs 8.66, up 2.12% on the BSE index.