RBI supersedes Boards of Srei Infra Fin, Equipment Finance

Mumbai/Kolkata, October 4

The RBI on Monday superseded the Boards of Srei Infrastructure Finance and Srei Equipment Finance, citing concerns over governance and payment defaults, and decided to refer the two NBFCs for resolution under the insolvency law.

This is only the second time in as many years that the RBI is referring entities for the resolution process under the Insolvency and Bankruptcy Code (IBC) after taking first ever such step in the case of DHFL back in 2019.

Governance, payment woes

Srei Group owes around Rs18,000 crore to around 15 lenders and nearly Rs10,000 crore of external commercial borrowings and bonds
Rajneesh Sharma, former CGM of Bank of Baroda, has been appointed administrator to manage the affairs of the two companies
Further, the RBI will approach the National Company Law Tribunal (NCLT) for appointing the administrator as the insolvency resolution professional

Superseding the Boards of the crisis-hit Srei Infrastructure Finance Limited (SIFL) and Srei Equipment Finance Limited (SEFL), the RBI has appointed Rajneesh Sharma, former Chief General Manager of Bank of Baroda as the administrator to manage the affairs of the two companies.

A Srei Group spokesperson said SIFL was “shocked” by the RBI’s move as banks have been regularly appropriating funds from the escrow account they have controlled since November 2020, and added that necessary steps as advised by its lawyers will be taken.

In a statement, the RBI said it has “superseded the Board of Directors of Srei Infrastructure Finance Limited (SIFL) and Srei Equipment Finance Limited (SEFL), owing to governance concerns and defaults by the… companies in meeting their various payment obligations”.

The central bank 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, the statement said.

Further, the RBI will approach the National Company Law Tribunal (NCLT) for appointing the administrator as the insolvency resolution professional. — PTI