Trouble looms over SREI group as RBI supersedes the Board of the debt ridden NBFC over default
The Shares of SREI Infrastructure Finance were locked in a 5 per cent lower circuit in the morning trade on Tuesday, October 5, 2021
The Reserve Bank has on October 4, 2021, superseded the Board of Directors of SREI Infrastructure Finance Limited (SIFL) and its wholly-owned subsidiary SREI Equipment Finance Limited (SEFL), owing to governance concern and defaults by the two Kolkata based NBFCs in fulfilling their various payment obligations.
The outstanding Borrowings of SIFL are estimated at Rs 30783 crore. Key lenders to the defaulter are a Consortium of Banks led by UCO Bank and involves State Bank of India, Bank of Baroda, Bank of India, Indian Bank, PNB, Axis Bank, Canara Bank, Union Bank of India and others.
Pursuant to an order of NCLT, Kolkata Bench, the troubled company had proposed a Scheme of Arrangement with its Creditors on December 31, 2020. The order was later set aside by National Company Law Appellant Tribunal(NCLAT) wherein it held that any non-payment of dues by SREI Infrastructure Finance and SREI Equipment Finance will not be recognized as an event of default. It was valid till a scheme of arrangement is signed by all creditors, which included its lenders as well as bondholders.
The company, however, had failed to induct investors which prompted the Central Bank to supersede the board of SIFL and SEFL and apply for insolvency action. RBI has appointed Rajneesh Sharma, Former Chief General Manager, Bank of Baroda as the Administrator of the aforesaid companies.
“The Reserve Bank also intends to shortly 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 would also apply to the NCLT for appointing the Administrator as the Insolvency Resolution Professional,” RBI said.
The Shares of SREI Infrastructure Finance were locked in a 5 per cent lower circuit in the morning trade on Tuesday, October 5, 2021. The scrip was frozen at Rs 8.17 apiece on the BSE, down 5 per cent while on the National Stock Exchange (NSE), it was locked at Rs 8.20, down 4.65 per cent.