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Insolvency Case: RBI Supersedes Boards Of SREI Companies
Due to governance concerns and defaults by SREI Group Companies, the Reserve Bank of India on October 4 superseded the Boards of Directors of SREI Infra and SREI Equipment Finance Limited.
According to two people familiar with the situation, Srei Group's creditors last week rejected top management's request to grant the company a one-year moratorium on any legal or non-legal action to recover dues estimated at over Rs 35,000 crore.
The administrator has been named Rajneesh Sharma, the former Chief General Manager of the Bank of Baroda.
"In exercise of the powers conferred under Section 45-IE (1) of the Reserve Bank of India Act, 1934, the Reserve Bank has today superseded the Board of Directors of Srei Infrastructure Finance Limited (SIFL) and Srei Equipment Finance Limited (SEFL), owing to governance concerns and defaults by the aforesaid companies in meeting their various payment obligations," RBI said.
History
Since December last year, the Kolkata-based NBFC has been dealing with a human resource problem, with roughly 230-250 employees quitting the Srei group due to an asset-liability mismatch caused by the pandemic-induced economic catastrophe. In order to recoup their debts, the Srei group's lenders took control of the company's finances. They also set a salary ceiling of Rs 50 lakh per annum for top executives, which was increased in April of this year.
Axis Bank, UCO Bank, and State Bank of India are among the 15 lenders owed Rs 18,000 crore by the Srei group. According to Srei, the company's overall liabilities include approximately Rs 18,000 crore in bank loans and nearly Rs 10,000 crore in external commercial borrowings and bonds. The value of realizable assets, such as arbitration awards, is higher.
