Reliance Capital’s Board Superseded by RBI; Nageswar Rao Y Is New Administrator
Moneylife Digital Team 29 November 2021
The Reserve Bank of India (RBI) has decided to supersede the board of Anil Dhirubhai Ambani-owned non-banking financial company (NBFC) Reliance Capital Ltd due to governance concerns and defaults. While appointing an administrator, RBI said it will soon initiate bankruptcy proceedings against the NBFC. 
 
The banking regulator’s decision to supersede the board follows after the company could not meet payment obligations to various creditors and due to serious governance concerns at the company. “…the Reserve Bank has today superseded the board of directors of Reliance Capital (RCL) in view of the defaults by RCL in meeting the various payment obligations to its creditors and serious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,” RBI said in a release.
 
RBI had appointed Nageswar Rao Y, former executive director of Bank of Maharashtra, as the administrator of Reliance Capital. 
 
The RBI circular added that the central bank will also apply to the national company law tribunal (NCLT)’s Mumbai bench for appointing the administrator as the insolvency resolution professional (IRP).
 
Reliance Capital fell on hard times after the collapse of Infrastructure Leasing and Finance Ltd (IL&FS) in September 2018. Reliance Capital failed to pay back debt and, at the same time, collected money from its borrowers in a vicious cycle that saw it sell off several significant subsidiaries, including Reliance Mutual Fund.
 
In 2019, multiple ratings agencies had downgraded Reliance Capital to default imminent status. 
 
As per recent reports, lenders of the company had hit roadblocks in selling its asset for recovery due to multiple pending litigations against the company and its promoter. 
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