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RBI supersedes boards of Srei Infra & Srei Equipment Finance, appoints administrator

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RBI supersedes boards of Srei Infra & Srei Equipment Finance, appoints administrator


The RBI has superseded the board of Srei Infrastructure Finance Ltd & Srei Equipment Finance Ltd, and has appointed an administrator.

The Reserve Bank of India (RBI) on Monday superseded the boards of Srei Infrastructure Finance Ltd & Srei Equipment Finance Ltd and has appointed an administrator.

"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of the powers conferred under Section 45-IE (1) of the Reserve Bank of India Act, 1934, the Reserve Bank has today superseded the Board of Directors of Srei Infrastructure Finance Limited (SIFL) and Srei Equipment Finance Limited (SEFL), owing to governance concerns and defaults by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.
The apex bank has also appointed Rajneesh Sharma, ex-chief general manager, Bank of Baroda as the Administrator of the aforesaid companies under Section 45-IE (2) of the RBI Act.
Further, the RBI has constituted a three-member advisory committee to assist the administrator in the discharge of his duties. The members of the advisory committee are as follows: R. Subramaniakumar, former MD and CEO, Indian Overseas Bank; T T Srinivasaraghavan, former managing director, Sundaram Finance Ltd and Farokh N Subedar, former chief operating officer and company secretary, Tata Sons Ltd.
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"The Reserve Bank also intends to shortly initiate the process of resolution of the above two NBFCs under the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 and would also apply to the NCLT for appointing the Administrator as the Insolvency Resolution Professional," it said.
The Kolkata-based NBFC has been battling a human resource crisis since December last year with nearly 230-250 people leaving the Srei group, as the pandemic-induced economic crisis created an asset-liability mismatch. Subsequently, the lenders of Srei group took control of its finances, in a bid to recover their dues. They also capped the salaries of the top level executives to Rs 50 lakh per annum, which was lifted in April this year.
Srei group owes around Rs 18,000 crore to around 15 lenders, including Axis Bank, UCO Bank and State Bank of India. Srei said its total liabilities are around Rs 18,000 crore of bank loans, and another nearly Rs 10,000 crore of external commercial borrowings and bonds. Realisable assets, including arbitration awards, are higher.
Srei, which is mainly a holding company now after transferring its business to subsidiary Srei Equipment Finance (SEFL) in November 2019, expressed full confidence regarding paying back its creditors. A reworked repayment schedule has been chalked out with the lenders to clear their dues.
In October 2020, the company proposed to pay its dues (principal and interest) to banks and all creditors in a structured and orderly manner over time.
"However, we have still not been able to conclude the discussions with our lenders and move forward. Over the last three decades, Srei has already paid Rs 30,000 crore as interest and paid back another Rs 20,000 crore interest to banks. There has never been any delay in loan servicing by Srei in the past before Covid-19 ravaged the country," it said.
Srei group mainly serves the MSME and infrastructure sector.
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