Days after the Reserve Bank of India (RBI) superseded the boards of SREI Infrastructure Finance and SREI Equipment Finance and also said that insolvency proceedings will be initiated against the Kolkata-based company, the Bombay High Court has rejected a plea by the company to challenge the central bank's action.
SEBI Group promoters, Adisri Commercial Pvt. Ltd, had filed a writ petition against the RBI's action and sought a stay on insolvency proceedings being initaited against Srei Infrastructure Finance Ltd (SIFL) and Srei Equipment Finance Ltd (SEFL).
The High Court said it is not inclined to entertain the matter after hearing the arguments from both sides, Business Standard reported.
The RBI had superceded the boards of SIFL and SEFL over governance concerns and defaults. SIFL alone reported a loss of Rs 3,810 crore in Q3 FY22.
“The Reserve Bank has today superseded the Board of Directors of Srei Infrastructure Finance Limited (SIFL) and Srei Equipment Finance Limited (SEFL), owing to governance concerns and defaults by the aforesaid companies in meeting their various payment obligations. The Reserve Bank also intends to shortly initiate the process of resolution of the above two NBFCs under the Insolvency and Bankruptcy Rules, 2019 and would also apply to the NCLT for appointing the Administrator as the Insolvency Resolution Professional,” the central bank had said in a statement.
It is estimated that SREI Group owes around Rs 30,000 crore to lenders and bond holders. According to a recent Economic Times report, Kolkata-based UCO Bank was the lead lender with exposure of over Rs 2,000 crore, while State Bank of India too reportedly has an exposure of around Rs 2,000 crore.
The petition had alleged that the RBI acted in "complete haste, entirely arbitrarily and without application of mind".
The RBI-appointed administrator on Thursday assured the company's employees that they would have job security, and said there would not be any job losses during the transition period.