The Reserve Bank of India (RBI) has superseded the board of directors of Reliance Capital Ltd. (RCL), promoted by Anil Ambani’s Reliance Group.
The regulatory action is “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”, the RBI said in a circular.
Administrator appointed
Former Bank of Maharashtra executive director Nageswar Rao Y has been appointed as the Administrator of the company.
The central bank said it would shortly initiate the process of resolution of the company under the Insolvency and Bankruptcy Rules, 2019.
“Reserve Bank will also apply to the NCLT, Mumbai for appointing the Administrator as the Insolvency Resolution Professional,” the regulatory added in the circular.
In June 2019, auditors raised several red flags around Reliance Capital’s fourth-quarter results, including a lack of clarity in accounting methodology.
The company has since then failed to make several debt obligation payments.
The RBI’s move against Reliance Capital follows a similar step taken against Srei Infrastructure Finance Ltd. and Srei Equipment Finance Ltd. earlier this year.
Reliance Capital did not immediately respond to a request for comment.
(With Reuters inputs)