Key Points
The Reserve Bank of India (RBI) on May 29 directed ECL Finance Ltd (ECL) to cease and desist, with immediate effect, from undertaking any structured transactions in respect of its wholesale exposures, other than repayment and/or closure of accounts in its normal course of business...
In its advisory, the central bank also asked Edelweiss Asset Reconstruction Company Limited (EARCL) to cease and desist from the acquisition of financial assets including security receipts (SRs) and reorganising the existing SRs into senior and subordinate tranches...
The central bank, in the exercise of its powers under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and the Reserve Bank of India Act, 1934 imposed business restrictions on the following supervised entities respectively, belonging to the Edelweiss Group...
The RBI further noted that in ECL supervisory observations included submission of incorrect details of its eligible book debts to its lenders for computation of drawing power, non-compliance with loan-to-value norms for lending against shares, incorrect reporting to Central Repository for Information on Large Credits system (CRILC) and non-adherence to Know Your Customer (KYC) guidelines...
Shares of Edelweiss Financial Services tanked over 17% in early deals today after the Reserve Bank of India (RBI) on May 29 announced supervisory actions against ECL Finance and Edelweiss Asset Reconstruction Company, citing material supervisory concerns..
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