RBI to soon start insolvency process of Reliance Capital, supersedes Board

Reliance Capital’s board of directors has been replaced by the Reserve Bank of India (RBI), as the business has defaulted on several payment obligations to its creditors and will shortly enter the insolvency process.

According to the RBI, there are major governance concerns that the Board has not been able to adequately resolve. Y Nageswar Rao, a former director of the Bank of Maharashtra, has been designated as the company’s administrator by the Central Bank.

The Reserve Bank announced that it will begin the process of resolving the company under the Insolvency and Bankruptcy Code in the near future.

The Reserve Bank of India has today superseded the Board of Directors of M/s Reliance Capital Ltd (RCL) in exercise of the powers conferred under Section 45-IE (1) of the Reserve Bank of India Act, 1934, in light of RCL’s defaults in meeting various payment obligations to its creditors and serious governance concerns that the Board has not been able to address effectively.

The Central Bank will also request that the administrator be appointed as the Insolvency Resolution Professional by the NCLT.

After DHFL and Srei Group entities, Reliance Capital will be the third non-banking financial company to file for insolvency.