The Reserve Bank of India superseded the board of directors of Reliance Capital and announced plans for insolvency proceedings citing payment defaults and serious governance concerns which the board has not been able to address. RBI has also appointed Nageswar Rao, former executive director of Bank of Maharashtra as the administrator. “RBI will also apply to the National Company Law Tribunal for appointing the administrator as the insolvency resolution professional,” the regulator said in a statement.
Reliance Capital said in a statement, “The company will cooperate fully with the administrator appointed by the RBI for the expeditious resolution of its debt in the best interests of all stakeholders.” Anil Ambani’s telecom companies are already under insolvency proceedings and he had earlier told a London court that he did not have any notable assets to repay Chinese banks.
The Anil Ambani-owned RCL is the third financial services firm to face insolvency proceedings after the law was amended to include NBFCs two years ago. The RBI action comes more than two years after Reliance Capital was declared a defaulter by Care Ratings for failing to meet its payment obligations. RCL in its statement attributed the delay in resolution to the complexity of litigation initiated by secured and unsecured lenders, resulting in the pendency of over 10 cases in various courts.
