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Tuesday, October 26, 2021

Reserve Bank supersedes boards of Srei Infrastructure, Srei Equipment Finance

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The Reserve Bank of India said on Monday it has superseded the board of directors of non-banking financial companies Finance Ltd and Srei Equipment Finance Limited due to governance concerns and defaults, adding that it will initiate bankruptcy proceedings against them.

Rajneesh Sharma, the former Chief General Manager of the Bank of Baroda, has been appointed the administrator.

Last week, a consortium of lenders led by UCO Bank sought central bank directions on pursuing recovery of dues from the Srei Group after loans worth about Rs 30,000 crore to the Kolkata-based financier officially qualified to be moved to the list of non-performing assets (NPA) this quarter.

Srei Infrastructure, and its subsidiary Srei Equipment Finance, together owe lenders and debenture holders a total of Rs 30,000 crore. Kolkata-based UCO Bank is the lead lender, with more than Rs 2,000 crore of exposure. State Bank of India (SBI)’s exposure to the group is also more than Rs 2,000 crore.

Srei has been facing a severe liquidity crunch for some time. Latest available results show the company’s condition has deteriorated.

Srei Infrastructure reported a loss of Rs 971 crore in the quarter ended June as provisions on loans increased to Rs 439 crore, rising more than six times from just Rs 67 crore a year ago, as collections were hit due to the severe impact of the Covid 19 pandemic.

The company had posted a net profit of Rs 23 crore in the same quarter a year ago.

Courtesy – economictimes.indiatimes.com

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