The Reserve Bank of India has placed Reliance Capital NSE -4.89 percent under insolvency proceedings (RBI).
The central bank filed an application to start the Corporate Insolvency Resolution Process (CIRP) against Reliance Capital Ltd under the Insolvency and Bankruptcy Code of 2016.
RCL’s board of directors was dismissed by the RBI on November 29, and the company’s administrator was named Y Nageswar Rao, a former executive director of the Bank of Maharashtra.
According to a press release from the central bank, the decision was taken “in light of RCL’s difficulties in meeting numerous payment obligations to its creditors and major governance concerns that the board has not been able to address effectively.”
RCL is a holding corporation that owns insurance companies, asset reconstruction firms, brokerage firms, and a portion of a commodity exchange.
Reliance General Insurance, Reliance Securities, and the RBI-registered NBFC Reliance Financial Limited, which specialises in capital market-linked finance, are all 100% owned by the company.
The deal also includes a 51 percent investment in Reliance Nippon Life Insurance, a 49 percent share in Reliance Asset Reconstruction Ltd, and a 20 percent stake in the Indian Commodity Exchange, which trades commodity derivatives.
RCL owes Rs 19,805 crore to its creditors, with the trustee Vistra ITCL India Ltd holding the majority of the bonds.
In the last two months, the RBI has taken another NBFC to bankruptcy court. The central bank sanctioned the Srei Group, located in Kolkata, last month.