India initiates bankruptcy proceedings against Reliance Capital; co to comply


A logo of the Reserve Bank of India (RBI) can be seen at the door of its office in New Delhi, India on November 9, 2018. REUTERS / Altaf Hussain

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BENGALURU, Nov. 29 (Reuters) – India’s central bank on Monday announced on how to file bankruptcy proceedings against Reliance Capital Ltd (RLCP.NS), replacing the board of directors of the non-bank finance company over governance issues .

Chaired by Anil Ambani, the younger brother of Indian billionaire Mukesh Ambani, Reliance Capital welcomed the decision of the Reserve Bank of India (RBI) to settle the company’s debt in accordance with the insolvency and bankruptcy code.

The company said it will cooperate with the RBI-appointed administrator Nageswar Rao Y, former executive director of Bank of Maharashtra Ltd (BMBK.NS).

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In June 2019, auditors raised several red flags regarding Reliance Capital’s fourth quarter results, including a lack of clarity in its accounting methodology.

Since then, the company has not made several debt and interest payments on the debentures.

Reliance Capital said that despite its best efforts over the past two years, complex legal battles and litigation from some lenders have stalled the firm’s plans to resolve its debt.

“The company has no outstanding loans from banks and nearly 95% of its debt is in the form of debentures,” Reliance Capital said in a statement. declaration.

Last year, an Indian court stayed insolvency proceedings against Anil Ambani and banned him from selling any of his assets. The besieged Ambani does not own any shares in Reliance Capital as of March 31 of this year.

The RBI’s ruling against Reliance Capital follows a similar action taken against Srei Infrastructure Finance Ltd (SREI.NS) and Srei Equipment Finance Ltd earlier this year. Read more

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Reporting by Anuron Kumar Mitra and Shivani Singh in Bengaluru; Editing by Shounak Dasgupta and Maju Samuel

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