The Reserve Bank of India ("RBI") has, in its capacity as the regulator of non-banking financial companies and under the powers conferred to it pursuant to Section 45-IE (1) of the Reserve Bank of India Act, 1934 ("RBI Act"), superseded the Board of Directors of SIFL and SEFL.

The press release of even date from the RBI also stipulates the following:

1)   The step has been taken owing to governance concerns and defaults by SIFL and SEFL in meeting their various payment obligations.

2)   Shri Rajneesh Sharma, Ex - Chief General Manager, Bank of Baroda has been appointed as the Administrator of SIFL and SEFL under Section 45-IE (2) of the RBI Act.

3)   The RBI also intends to shortly initiate the process of resolution of SIFL and SEFL under the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019.

4)   The RBI would also apply to the National Company Law Tribunal for appointing the Administrator as the Insolvency Resolution Professional.

The Piramal Group recently concluded its acquisition of Dewan Housing Finance Limited. This was the largest recovery of stressed assets and marked the first successful resolution of a financial services company under the Insolvency and Bankruptcy Code, 2016 (as amended).

Originally published 4 October 2021.

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