The Reserve Monetary establishment of India (RBI) on Tuesday lifted its five-month-long restrictions on two Edelweiss Group entities—ECL Finance and Edelweiss Asset Reconstruction Agency (ARC)—after the businesses took corrective steps to align with regulatory norms.
The restrictions, imposed on Might 29, have been no slap on the wrist. ECL Finance was barred from endeavor structured transactions tied to its wholesale exposures, aside from common repayments or account closures.
Edelweiss ARC was ordered to halt acquisitions of financial property, along with security receipts (SRs), and reorganize its SR holdings into senior and subordinate tranches.
The businesses have been penalized for indulging in a set of “structured transactions” geared towards evergreening distressed loans—a switch that disguised the true extent of harassed property.
Evergreening consists of extending up to date loans to harassed debtors to repay present ones, a apply the RBI has warned in direction of for masking financial realities.
The regulator’s measures have been harsh nevertheless clear-cut. ECL and Edelweiss ARC confronted a strict freeze that pushed them into movement. “The companies engaged with the RBI on the remedial measures to cope with the supervisory issues,” the central monetary establishment acknowledged. Glad with the measures undertaken, the RBI launched the lifting of restrictions, signaling an end to the sanctions beneath the RBI Act, 1934, and the SARFAESI Act, 2002.
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