Reliance Capital hit a lower circuit of 5% at Rs 18.10 after the Reserve Bank of India superseded the company's board yesterday.
In a statement issued on Monday (29 November 2021), the Reserve Bank said that it has superseded the board of directors of Reliance Capital (RCL) in view of the defaults by RCL in meeting the various payment obligations to its creditors and serious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 has appointed Nageswar Rao Y (ex-executive director, Bank of Maharashtra) as the administrator of the company.
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, the Central Bank said in a statement.
RCL said that it welcomes the Reserve Bank of India's (RBI) move to resolve the Company's debt in accordance with the IBC Code.
The company said that it will co-operate fully with the administrator appointed by the RBI for the expeditious resolution of its debt in the best interests of all stakeholders.
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 (Debts Recovery Tribunal), has effectively stalled the resolution of the company's debt, despite its best efforts for the past over 2 years.
Reliance Capital owns profitable and valuable operating businesses, through its 100% shareholding in RGIC and 51% shareholding in RNLIC (a JV with global leader, 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.
The company has no outstanding loans from banks and approximately 95% of its debt is in the form of debentures, RCL said in a statement.
Reliance Capital is a financial services company. It has interests in life, general and health insurance; commercial & home finance; equities and commodities broking; wealth management services; distribution of financial products; asset reconstruction; proprietary investments and other activities in financial services.
The company reported a consolidated net loss of Rs 1190 crore in Q2 FY22 as against a net loss of Rs 2598 crore in Q2 FY21. Total income during the quarter rose by 21.75% YoY to Rs 6,0001 crore.
Powered by Capital Market - Live News
Disclaimer: No Business Standard Journalist was involved in creation of this content
