RBI Bars Mastercard From Onboarding New Customers In India


Reserve Bank Of India (RBI), on Saturday, filed an utility for initiating the insolvency proceedings towards two corporations of the Srei group of corporations. The utility was filed on the Kolkata Bench of the National Companies Law Tribunal.

The transfer got here after the central financial institution took over the board of Srei Infrastructure Finance and Srei Equipment Finance, on October 4, 2021. It has additionally appointed an advisory panel headed by former Chief General Manager of Bank of Baroda, Rajneesh Sharma. Other members of the panel embrace the previous MD of Sundaram Finance, TT Srinivasaraghavan; former MD and CEO of Indian Overseas Bank, R Suramaniakumar and former COO and CS of Tata Sons Ltd., Farokh N Subedar.

Why did the RBI supersede the board of the 2 corporations?

The financial institution outdated the boards of two corporations due to the failure of the businesses to fulfill the governance in addition to cost obligations. The two corporations owe round Rs. 29,000 crore to the collectors, as of March 6, 2021.

The drawback got here to the floor after the central financial institution performed a particular audit for the 2 corporations. The infrastructure sector has been beneath fixed stress because the IL&FS disaster in 2018. Covid-19 has solely escalated the issues.

After RBI’s tips, the 2 corporations had been allowed to restructure their belongings and never their liabilities. This created a mismatch within the money circulation and delayed the additional funds.

What occurs subsequent?

Now that the RBI has moved to the NCLT, after the admission of the applying by the NCLT, the boards of the 2 corporations will stand suspended. A moratorium has been carried out from the date of utility until the plea is accepted or rejected by the tribunal.

In the moratorium interval, no authorized proceedings might be undertaken towards the 2 corporations. The corporations, too, can’t switch or get rid of any of their belongings. Once the plea is accepted, the RBI will start the insolvency proceedings beneath the Insolvency and Bankruptcy Rules, 2019.

This is just not the primary that point a monetary service supplier has been referred to NCLT for insolvency. Dewan Housing Finance Corporation was the primary firm to be referred to the tribunal. Going by the DHFL’s instance, the collectors might must let go of a significant chunk of the loans and advances given to the NBFC.




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