RBI appoints three-member advisory committee to assist RCap's administrator

The regulator appointed Nageswar Rao Y, former executive director of Bank of Maharashtra, administrator of the company.

After superseding the board of Reliance Capital (RCap), the Reserve Bank of India (RBI) on Tuesday appointed an advisory committee tasked with assisting the administrator appointed to the company in discharging his duties.

The three-member advisory committee will include State Bank of India’s ex–deputy managing director (DMD) Sanjeev Nautiyal, Axis Bank’s ex-DMD Srinivasan Varadarajan, and Tata Capital’s ex-MD and chief executive officer Praveen P Kadle.

The RBI on Monday superseded the board of RCap, owing to defaults and governance issues, and said the insolvency proceedings would be initiated against the company soon, making it the third instance of a non-banking financial company (NBFC) being brought under insolvency proceedings.

The central bank superseded the board of Dewan Housing Finance Corporation in November 2019, and then two NBFCs of Srei Group in October this year.

The regulator appointed Bank of Maharashtra’s former executive director Nageswar Rao Y as administrator of the company.

In a statement to exchanges, the company said it welcomed the RBI’s move to resolve the company’s debt in accordance with the Insolvency and Bankruptcy Code and would fully cooperate with the administrator appointed by the RBI for expeditious resolution of its debt in the best interests of all stakeholders.

“The complexity of litigation initiated by certain secured and unsecured lenders, resulting in the pendency of over 10 cases on various fora, including the Supreme Court, Bombay High Court (HC), Delhi High Court, and debt recovery tribunal, has effectively stalled the resolution of the company’s debt, despite its best efforts over two years,” it said.

The company has no outstanding loans from banks and approximately 95 per cent of its debt is in the form of debentures, read the statement.