RBI probe found liabilities swelling, but capital eroding rapidly at RCap

The RBI had kept the firm in constant watch as part of its informal asset quality review, and carried out regular inspections

The Reserve Bank of India’s (RBI’s) action on Reliance Capital (RCL) stems from several factors that were long in the making.

Defaults apart, the central bank’s inspection found that the firm had liabilities more than three times the permissible limit. Its capital, in terms of a certain benchmark, had reduced to about one-third of the regulatory requirement. This came as the firm became negative in terms of net worth, according to people familiar with the matter.
 

RCL defaulted on its local debt obligations from October 2019. As of March 31, 2021, outstanding overdue towards the lenders and debenture holders stood at