New order for NBFCs

RBI's timely action on Srei shows willingness to use its powers

The Reserve Bank of India (RBI), as the regulator of banks and non-banking financial companies (NBFCs), on Monday announced it was superseding the boards of Srei Infrastructure Finance and Srei Equipment Finance. The RBI also said a former chief general manager of the Bank of Baroda would be appointed administrator of the NBFCs as they were shifted towards the process outlined in the Insolvency and Bankruptcy Code. After this, the central bank will apply to the National Company Law Tribunal, which oversees the bankruptcy process, to appoint the administrator as the resolution professional for the companies.

The RBI’s action is