The Reserve Bank of India on Monday superseded the board of Reliance Capital, saying that the company has not been able to meet payment obligations to its creditors and address other “serious governance concerns”.
Reliance Capital is a non-banking financial institution with industrialist Anil Ambani acting as its chairperson.
In a statement, the central bank said it has appointed Nageswar Rao Y, the former executive director of Bank of Maharashtra, as the administrator of the debt-ridden company. The Reserve Bank also said that it will shortly start bankruptcy proceedings against the company.
“Reserve Bank will also apply to the NCLT [National Company Law Tribunal] Mumbai for appointing the administrator as the Insolvency Resolution professional,” the statement said.
In its annual general meeting in September, Reliance Capital had said that the company’s consolidated debt was Rs 40,000 crore, reported PTI. The company had also reported a consolidated loss of Rs 1,156 crore for the second quarter in the current fiscal against Rs 6,001 crore income.
During the 2020-’21 financial year, Reliance Capital posted a loss of Rs 9,287 crore on a total income of Rs 19,308 crore.
Till September-end, the company had its liabilities pegged at Rs 79,031, including debt securities worth Rs 18,320 crore, according to Bloomberg.
Reliance Capital is the third non-banking financial institution against which insolvency proceedings will be initiated. The other two are Dewan Housing Finance Corporation and two entities of Srei Group.
While the insolvency proceedings against Dewan Housing has been completed, the one against Srei Group is pending.
Reliance Capital was registered as a non-banking financial institution in 1998. Since then, it has diversified its activities into other areas such as insurance, stock broking, commercial finance, asset management and industrial finance, among others.