Srei Infrastructure Finance share price was locked in a 5 percent lower circuit in the early trade on October 5, a day after Reserve Bank of India (RBI) superseded the board of directors of the company.
The RBI superseded the board of directors of Srei Infrastructure and its wholly-owned subsidiary Srei Equipment Finance Limited due to governance concerns and defaults by Srei Group companies.
The central bank appointed Rajneesh Sharma, the former chief general manager of Bank of Baroda, as administrator.
The RBI will soon initiate the process of resolutions of the NBFCs under the Insolvency and Bankruptcy Rules, 2019, and apply to the National Company Law Tribunal (NCLT) for appointing the administrator as Insolvency Resolution Professional.
Also read: Lenders reject Srei’s standstill appeal; company moves a step closer to bankruptcy
The development comes a week after creditors of the Srei Group rejected the top management’s proposal to grant the company a one-year standstill from any action—legal or otherwise—to recover dues estimated at around Rs 35,000 crore.
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The Srei Group cumulatively owes more than Rs 30,000 crore to banks which approached the RBI for a resolution similar to DHFL, which was acquired by Piramal Group for Rs 38,000 crore.
"The appointment of the administrator by the RBI paves the way for the corporate resolution process of the two Srei entities. Once the NCLT approves the same, the board of directors of these entities will stand suspended. A moratorium will be imposed on any proceedings against these entities, enforcement of any security or transfer of assets," said Aashit Shah, Partner, J Sagar Associates.
"The CIRP will enable foreign creditors, including ECB lenders and bond -holders, to restructure their debts alongside domestic creditors. If a resolution plan is successfully approved under the CIRP, it will allow the companies to start on a clean slate, which is missing under the RBI stressed assets framework. This decision of RBI follows on the heels of a successful resolution process of DHFL," he added.
On October 1, Moneycontrol had reported that lenders to Srei Group had adjusted Rs 3,000 crore from Srei Equipment Finance Ltd’s cash flow against the loan dues in the last 10 months drawing money from the trust and retention account (TRA).
At 0917, Srei Infrastructure Finance was quoting at Rs 8.17, down Rs 0.43, or 5 percent on the BSE.
The share touched a 52-week high of Rs 18.39 on June 23, 2021 and a 52-week low of Rs 5.01 on March 31, 2021. It is trading 55.57 percent below its 52-week high and 63.07 percent above its 52-week low.
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