RBI Monday said that it has superseded the board of Reliance Capital owing to the defaults of the company.
This comes after it defaulted in meeting various payment obligations.
“The Reserve Bank of India has superseded the Board of Directors of M/s Reliance Capital Ltd (RCL) in view of the defaults by RCL in meeting the various payment obligations to its creditors and serious governance concerns which the Board has not been able to address effectively,” its statement said.
The RBI also appointed Nageswar Rao Y, former Executive Director, Bank of Maharashtra, as the administrator of the company.
The central bank will then initiate the process of resolution of the company under the Insolvency and Bankruptcy Rules, 2019.
The RBI will now apply to the NCLT, Mumbai for appointing the Administrator as the Insolvency Resolution Professional, said the central bank.
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Reliance Capital had defaulted on interest payments on loans worth Rs 624 crore drawn from HDFC and Axis Bank.
Reliance capital borrowed term loans from HDFC for a period of six months to seven years at 10.6 per cent -13 per cent. From the Axis Bank at 3-7 years for 8.25 per cent.
In April 2021, the company had failed to make the interest payment for non-convertible debentures (NCDs) due on April 22.
It is worth noting that the Board of Reliance Capital Ltd includes Anil Ambani, Rahul Sarin, Chhaya Virani, Thomas Mathew, A N Sethuraman, and Dhananjay Tiwari.
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