RBI takes control of Anil Ambani-owned Reliance Capital, to push for insolvency
Reserve Bank of India (RBI) on Monday superseded the board of debt-ridden industrialist Anil Ambani promoted Reliance Capital Ltd (RCL) and will shortly initiate bankruptcy proceedings against the debt-ridden NBFC in view of payment to defaults and serious governance issues. Y Nageswar Rao (Ex-Executive Director, Bank of Maharashtra) has been appointed as the administrator of the company, the RBI said in a statement.
This is the third large (Non-Banking Finance Company ) NBFC against which the central bank will initiate bankruptcy proceedings under the Insolvency and Bankruptcy Code recently. The RBI has initiated similar proceedings against Srei Group NBFCs and Dewan Housing Finance Corporation (DHFL). While the proceedings against DHFL have been completed, the Srei issue is still pending.[1]
Anil Ambani is now facing loan defaulting cases even with the Chinese Banking consortium. Recently a London-based Court has ordered Ambani to pay 717 million dollars (Rs.5400 crore) and he pleaded that he is now bankrupt. Chinese Banks also filed in Delhi High Court for recovering Rs.990 crore from Anil Ambani promoted firms.[2]
“…The Reserve Bank has today (Monday) superseded the Board of Directors of M/s Reliance Capital Ltd (RCL) in view of the defaults by RCL in meeting the various payment obligations to its creditors and serious governance concerns which the Board has not been able to address effectively,” the central bank said. The statement further said the Reserve Bank will shortly initiate the process of resolution of the company under the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019.
“Reserve Bank will also apply to the NCLT, Mumbai for appointing the Administrator as the Insolvency Resolution Professional,” it said. In September, Reliance Capital in its annual general meeting (AGM) had informed shareholders that the company’s consolidated debt was Rs.40,000 crore. The company reported a consolidated loss of Rs.1,156 crore for the second quarter this fiscal against Rs.6,001 crore income. During 2020-21, the company had posted a loss of Rs.9,287 crore on a total income of Rs.19,308 crore.
Reliance Capital in its statement said the “complexity of litigation” initiated by certain secured and unsecured lenders, resulting in the pendency of over 10 cases in various fora — including the Supreme Court, Mumbai High Court, Delhi High Court and DRT — has effectively stalled the resolution of the company’s debt, despite its best efforts for the past over two years.
“The Company owns profitable and valuable operating businesses, through its 100 percent shareholding in RGIC and 51 percent shareholding in RNLIC (a JV with Nippon Life Co. Of Japan), which represent the majority of the value of the Company being a Core Investment Company (CIC), besides other financial investments,” it said. Reliance Capital further said it has “no outstanding loans from banks” and approx 95 percent of its debt is in the form of debentures.
The company looks forward to expeditious resolution of its debt and continuation as a well-capitalized going concerned through the IBC process, in the overall interests of all its stakeholders, including lenders, customers, employees and shareholders, it added
References:
[1] RBI files insolvency pleas against two Srei Group firms in NCLT. Owe over Rs.30,000 crore to banks and financial institutions – Oct 08, 2021, PGurus.com
[2] After fixing debt ridden Anil Ambani in London Courts by Chinese banks, Chinese firm approach Delhi HC for Rs.995 crores dues. HC orders stay on sale of Reliance Infra shares in BSES – Jan 26, 2021, PGurus.com
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Govt protecting Reliance family from China. Reliance is the biggest cheater & manipulator of ruling govt irrespective of it being Khangress or BJP. Reliance is the most corrupt company