RBI supersedes boards of SREI companies, plans for insolvency proceedings | Business Standard News

Clipped from: https://www.business-standard.com/article/companies/rbi-supersedes-boards-of-srei-companies-plans-for-insolvency-proceedings-121100400867_1.html

RBI said it has appointed Rajneesh Sharma, ex-chief general manager of Bank of Baroda, as the administrator of the companies

RBI, Reserve Bank of IndiaThe Reserve Bank has constituted a three-member advisory committee to assist the administrator (Photo: Shutterstock)

The Reserve Bank of India (RBI) on Monday superseded the boards of Srei Infrastructure Finance and Srei Equipment Finance, and said they will be taken for insolvency proceedings “owing to governance concerns and defaults by the aforesaid companies in meeting their various payment obligations”.

In a statement, RBI said it has appointed Rajneesh Sharma, ex-chief general manager of Bank of Baroda, as the administrator of the companies. The Reserve Bank has constituted a three-member advisory committee to assist the administrator. The members of the panel are R Subramaniakumar, former MD & CEO, Indian Overseas Bank, T T Srinivasaraghavan, former MD, Sundaram Finance Limited and Farokh N Subedar, former COO and Company Secretary, Tata Sons Limited.

“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 said in its statement. “The Reserve Bank also intends to shortly initiate the process of resolution of the two NBFCs under the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 and would also apply to the NCLT for appointing the Administrator as the Insolvency Resolution Professional,” it said.

As per analysts’ estimates, banks have about Rs 35,000 crore exposure to the SREI group, and a steep haircut is expected as part of resolution. Srei Infrastructure Finance’s former chief executive Rakesh Kumar Bhutoria had resigned recently, citing “salary payment issues”.

The pandemic induced lockdown severely dented the finances of the Kolkata-based NBFC, leading to an asset-liability mismatch.

Subsequently, the lenders of the company took control of its finances to recover their dues, triggering mass level exits at Srei Group, as salary delays became a routine, and remunerations of the top-level executives are capped at Rs 50 lakh per annum.

The chief operating officer (COO) of the company’s fully-owned subsidiary Srei Equipment Finance Ltd (SEFL) had left in April. The company secretaries of SIFL and SEFL had resigned in March and May, respectively.

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