Reliance Capital collapses after RBI replaces board of directors
Reliance Capital hit a 5% lower circuit at Rs 18.10 after the Reserve Bank of India replaced the company’s board yesterday.
In a statement released on Monday (November 29, 2021), the Reserve Bank said it had replaced the board of directors of Reliance Capital (RCL) due to RCL’s failure to meet various payment obligations to its creditors and serious governance issues. that the board of directors has not been able to deal with effectively.
The Central Bank appointed Nageswar Rao Y (ex-executive director, Bank of Maharashtra) as a director of the company.
The Reserve Bank will shortly initiate the corporate resolution process under the 2019 Insolvency and Bankruptcy Rules (Insolvency and Liquidation Proceedings of Financial Service Providers and Request to Adjudication Authority ). The Reserve Bank will also ask NCLT, Mumbai to appoint the administrator as an insolvency resolution professional, the Central Bank said in a statement.
RCL said it welcomes the decision of the Reserve Bank of India (RBI) to settle the company’s debt in accordance with the IBC code.
The company said it will cooperate fully with the administrator appointed by the RBI for the speedy settlement of its debt in the best interests of all stakeholders.
The complexity of litigation initiated by some secured and unsecured lenders, resulting in more than 10 cases pending in various forums, including the Supreme Court, Mumbai High Court, Delhi High Court and the DRT (Debts Recovery Tribunal) , effectively blocked the company’s debt resolution, despite its best efforts in over 2 years.
Reliance Capital has profitable and valuable operating activities, with its 100% stake in RGIC and 51% in RNLIC (a joint venture with world leader, Nippon Life Co. of Japan), which accounts for the majority of the value. of the company being a core investment company (CIC), in addition to other financial investments.
The company has no outstanding loans from banks and about 95% of its debt is in the form of bonds, RCL said in a statement.
Reliance Capital is a financial services company. She has interests in life, general and health insurance; commercial and real estate financing; stock and commodity brokerage; wealth management services; distribution of financial products; reconstruction of assets; own-account investments and other activities in financial services.
The company reported a consolidated net loss of Rs 1,190 crore in Q2 FY22 against a net loss of Rs 2,598 crore in Q2 FY21. Total income in the quarter increased 21.75% year-on-year to Rs 6,0001 crore.
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