Religare Finvest debt recast in doubt as company gets 'fraud' tag from RBI

Promoter Religare Enterprises contests tagging of Religare Finvest Ltd as 'fraud'

Religare Finvest Ltd’s (RFL) debt restructuring has hit a hurdle after the Reserve Bank of India informed that the plan can’t proceed with Religare Enterprises Ltd continuing as promoter since RFL exposure is treated as “fraud”.  

Religare Enterprises in a filing with the BSE said that RFL had represented to RBI regarding wrongful classification of it's account as “fraud”. RFL is in the process of taking suitable measures in this regard.

According to India Ratings on RFL, there have been continued delays in debt servicing due to its stretched liquidity situation, along with a strained funding profile. Loans to RFL carry a “D” rating. The company is still under the corrective action plan as advised by the Reserve Bank of India (RBI) since January 2018.

Rashmi Saluja Chairperson, REL and CMD, RFL in a statement said Religare Finvest has itself been victim of fraud perpetuated by its erstwhile promoters and management.

The legal and corrective actions have already been initiated. RFL was hopeful that they would be able to get this fraud tagging by lenders removed at the earliest for successful implementation of Debt Restructuring Plan with REL continuing as its promoter, Saluja said.

Earlier, the debt resolution plan was proposed with TCG Advisory Services Pvt. Ltd.  as the investor. However, the RBI did not approve of this request for a change in RFL’s control in favour of TCG Advisory Services.

RFL is a non-bank finance company primarily providing loans to small and medium enterprises. RFL had total assets worth Rs 54.04 billion at end-March 2020.