Religare Finvest Limited on the path to revival
Press Release: 8th January, 2020
Religare Enterprises Limited shares initiatives and milestones on Religare Finvest’s path to revival
Religare Finvest Limited (RFL), which has been one of the leading SME financing platforms in India with a peak loan book of Rs. 16,000 Cr has been going through difficult times in the recent past on account of mismanagement and misappropriation of funds, orchestrated by the erstwhile promoters. Following this, the Reserve Bank of India (RBI) had placed RFL under a Corrective Action Plan (CAP) in January 2018 (as a precautionary measure, to prevent further pilferage of funds) which entails prohibition on RFL from expansion of its credit and investment portfolios.
Subsequently, the shareholding of the erstwhile promoters has dropped to less than 1% in Religare Enterprises Limited (REL). The company has already applied to the Stock Exchanges to classify the erstwhile promoters as public shareholders.
Thereafter, in early FY19, Religare Finvest Limited (RFL) underwent a complete revamp of its Board of Directors and the new Board, comprising entirely of Independent Directors, hired new management to professionally manage the Company. The new management has since been striving to revive the company by resolving its asset liability mismatch and bring the capital adequacy to desired regulatory levels. There was an urgent need to bring REL out of its legacy issues and several steps were taken by the new Board and the management in addressing all of this. The revamping of the Boards has also helped revive stakeholder’s confidence including regulators, investors, bankers etc. Despite being under Reserve Bank of India’s Corrective Action Plan (CAP), which prohibits doing new business, majority banks were kept standard till 30th September, 2019 and Company repaid close to Rs. 5,600 to banks till December 2019. The Company had proposed debt resolution plan in March 2019, well ahead of the RBI circular of 7th June, 2019 and it is in very advanced stages of restructuring of its debt. It is expected that the CAP removal will happen primarily upon RFL achieving regulatory capital adequacy / CRAR as well as acceptable NPA levels.
“All efforts continue to be made to rebuild the business, mobilise fresh capital and correct the transgression & legacy issues of the past. The management and internal controls at the Group and all subsidiaries’ level have also been revamped, bringing in much needed assurance to employees about a stable and action-oriented management.”, said Dr. Rashmi Saluja, Executive Chairperson of Religare Enterprises Limited.
“The efforts of the new management have resulted in favorable developments which include, setting up the right corporate governance & hiring of professionals, enhanced engagement with the regulators, including RBI, in providing timely updates and submissions and implementation of the Comprehensive Revival Plan for the company which primarily includes the Debt Resolution Plan (RP) and change in control.”, added Mr. Sanjay Palve, CEO, Religare Finvest Limited.
Details of the Comprehensive Revival Plan:
Both, Dr. Saluja and Mr. Palve summarised by saying, “If the debt restructuring plan gets approved, it will be the first such instance of an RP being approved in record time under the ICA platform, in terms of RBI’s June 7, 2019 circular and we will be the first NBFC to have achieved this. We are hopeful, that by March 2020, with the support of the banks and regulators, we will be able to complete the entire process of the DR plan, by when all milestones should fall into place, subject to regulatory approvals. We are confident, that our long term vision for the revival and sustainability of Religare Finvest will be achieved soon.”
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About Religare Enterprises Limited:
Religare Enterprises Limited is a diversified financial services group offering SME loans, affordable housing loans, health insurance services and retail broking services through its subsidiaries and operating entities and is listed on the BSE and NSE. As a group, Religare caters to diverse segments of the market from mass retail to affluent SMEs to mid-size corporates. Its subsidiaries service over 1.1 million clients from over 1,275 locations having presence in more than 400 cities.
For more information, visit www.religare.com