RBI files application to initiate insolvency proceedings against Reliance Capital

The Reserve Bank of India on Thursday filed an application for initiation of Corporate Insolvency Resolution Process (CIRP) against Reliance Capital Limited. The central bank has initiated the insolvency process under the Insolvency and Bankruptcy Code, 2016.

The application has been filed at the Mumbai Bench of the National Company Law Tribunal (NCLT).

"The Reserve Bank has today (December 02, 2021) filed an application for initiation of CIRP against Reliance Capital Ltd., under Section 227 read with clause (zk) of sub-section (2) of Section 239 of the Insolvency and Bankruptcy Code (IBC), 2016 read with Rules 5 and 6 of the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudication Authority) Rules, 2019 ("FSP Insolvency Rules") at the Mumbai Bench of the Hon'ble National Company Law Tribunal," read an official notification from the RBI.

On Monday, the RBI had superseded the board of Anil Ambani's Reliance Group promoted company Reliance Capital Ltd (RCL) over defaults in meeting various payment obligations to its creditors and serious governance concerns which the board was not able to address effectively.

The central bank had appointed Nageswar Rao Y (Ex-Executive Director, Bank of Maharashtra) as the administrator of the NBFC.

On Tuesday, RBI had named an advisory committee to advise the Administrator for Reliance Capital. The members of the Advisory Committee included: Sanjeev Nautiyal, ex-DMD, State Bank of India; Srinivasan Varadarajan, ex-DMD, Axis Bank; and Praveen P Kadle, ex-MD & CEO, Tata Capital Limited.

RCL owes Rs 21,781.01 crore, including interest, as on October 31 to lenders. The firm has also defaulted on repayment of inter-corporate deposits taken from various parties aggregating to Rs 562 crore and interest amounting to Rs 120 crore for which maximum days of default ranges from 510 days to 567 days.

RCL made a loss of Rs 10,971 crore on a revenue of Rs 563 crore during the fiscal ended March 2021.

Also Read: RBI action against RCL: All you need to know about Reliance Capital

Also Read: RBI names 3-member advisory committee to Administrator for Reliance Capital