Mumbai: The Reserve Bank of India on Monday superseded the board of directors of Kolkata-based Srei Infrastructure Finance And sarei Equipment Finance and said it would initiate insolvency proceedings with the National Company Law Tribunal (NCLT). The central bank has cited governance concerns and defaults by the company and appointed former Bank of Baroda chief general manager Rajnish Sharma as the company’s administrator.
Shrey is the second finance company against which the central bank has initiated insolvency proceedings after DHFL.
The central bank’s action comes in the wake of a consortium of lenders led by UCO Bank classifying the group’s loans as non-performing assets.
From the private sector, ICICI Bank and Axis Bank have investments in Shreya while state Bank of India, Punjab National Bank and Canara Bank are other public sector creditors.
Although Srei companies had defaulted in 2020, they got relief after an order of the Kolkata Bench of the National Company Law Tribunal. The tribunal had held that non-payment of dues by the company cannot be recognized as default unless the lenders have agreed on a plan of arrangement. The moratorium was given on the ground that Shrey was seeking to merge two finance companies in the group. In June 2021, Srei companies reported to the exchanges that reserve Bank of India The inspection had identified a loan of Rs 8,576 crore as related party debt. This is about 30% of the group’s consolidated debt of Rs 28,700 crore. Overall, the group has a debt of over Rs 35,000 crore.
Founded by brothers Hemant and Sunil Kanoria, Srei Infrastructure is classified as an ‘NBFC-IFC’ by the RBI and has also got the status of ‘Public Finance Institution’ from the Ministry of Corporate Affairs. When contacted for a response on RBI’s statement, Hemant Kanoria, President, Srei Infrastructure and Srei Equipment Finance said, “We are shocked by this move by RBI as banks have been regularly appropriating funds from controlled escrow accounts since November. are. Also, we have not received any communication from banks on this issue.”
Following the RBI’s inspection findings, the banks had appointed KPMG to conduct the forensic audit. According to bankers, the central bank’s action indicates that the regulator believes that the assets are not sufficient to meet the liabilities. The central bank had conducted a special audit of Srei in 2018 to examine its ties with the IL&FS group. Thereafter it was concluded that Shrey had extended the loan against the ‘Letter of Awareness’ issued by IL&FS.
Shrey is the second finance company against which the central bank has initiated insolvency proceedings after DHFL.
The central bank’s action comes in the wake of a consortium of lenders led by UCO Bank classifying the group’s loans as non-performing assets.
From the private sector, ICICI Bank and Axis Bank have investments in Shreya while state Bank of India, Punjab National Bank and Canara Bank are other public sector creditors.
Although Srei companies had defaulted in 2020, they got relief after an order of the Kolkata Bench of the National Company Law Tribunal. The tribunal had held that non-payment of dues by the company cannot be recognized as default unless the lenders have agreed on a plan of arrangement. The moratorium was given on the ground that Shrey was seeking to merge two finance companies in the group. In June 2021, Srei companies reported to the exchanges that reserve Bank of India The inspection had identified a loan of Rs 8,576 crore as related party debt. This is about 30% of the group’s consolidated debt of Rs 28,700 crore. Overall, the group has a debt of over Rs 35,000 crore.
Founded by brothers Hemant and Sunil Kanoria, Srei Infrastructure is classified as an ‘NBFC-IFC’ by the RBI and has also got the status of ‘Public Finance Institution’ from the Ministry of Corporate Affairs. When contacted for a response on RBI’s statement, Hemant Kanoria, President, Srei Infrastructure and Srei Equipment Finance said, “We are shocked by this move by RBI as banks have been regularly appropriating funds from controlled escrow accounts since November. are. Also, we have not received any communication from banks on this issue.”
Following the RBI’s inspection findings, the banks had appointed KPMG to conduct the forensic audit. According to bankers, the central bank’s action indicates that the regulator believes that the assets are not sufficient to meet the liabilities. The central bank had conducted a special audit of Srei in 2018 to examine its ties with the IL&FS group. Thereafter it was concluded that Shrey had extended the loan against the ‘Letter of Awareness’ issued by IL&FS.
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