Inside The RBI s Decision To Replace The Boards Of Directors Of The SREI Group Of Companies

Share Us

1248
Inside The RBI s Decision To Replace The Boards Of Directors Of The SREI Group Of Companies
07 Oct 2021
6 min read

News Synopsis

The Reserve Bank of India has taken over the boards of SREI Group's two non-banking finance companies. The regulator cited the Kolkata-based company for a variety of errors, including evergreening loans and failing to follow income recognition and asset categorization requirements. According to the study, a statutory audit of both SIFL and SEFL's finances as of March 31, 2020 "found severe deterioration in (their) financial situation." SEFL's total borrowings were Rs 20,411 crore as of June 30, 2021, and the business has defaulted on 13 lenders for a total of Rs 10,457 crore.

The Reserve Bank discovered "several supervisory concerns'' during prior inspections, including "violation of IRACP regulations, evergreening of NPA accounts, linked lending, weak corporate governance standards, inadequate systems and control, poor compliance standards, and so forth." Similar criticisms were leveled at the company's leadership (SIFL). According to the RBI, SREI Infrastructure, SREI Equipment, and SEFL continue to violate RBI regulations and supervisory orders. The regulator uncovered instances of 'evergreening' during its forensic investigation between December 2020 and January 2021. The Kanoria family has challenged the RBI's move in the Bombay High Court. On October 6, Kanorias filed a writ petition to block the appointment of the Administrator and any insolvency proceedings against the firms.