RBI Rejects Edelweiss ARC’s Plea To Reappoint Raj Kumar Bansal As CEO

In a regulatory filing, the company informed that the central bank rejected the reappointment of Raj Kumar Bansal as the managing director and chief executive officer of the firm

Edelweiss Asset Reconstruction Company Limited (EARC) announced on Tuesday that its plea to reappoint its CEO was rejected by the Reserve Bank of India. In a regulatory filing, the company informed that the central bank rejected the reappointment of Raj Kumar Bansal as the managing director and chief executive officer of the firm. 

The decision from the banking regulator comes after the Edelweiss Group faced major restrictions earlier last month, reported Business Standard. Notably, the RBI placed major business curbs on two of the group’s subsidiaries companies in a crackdown in May.

As part of the process, the RBI barred the Edelweiss non-banking finance (NBFC) unit, ECL Finance Ltd, from conducting structured transactions. The central bank also imposed restrictions on EARC from ‘acquisition of financial assets including security receipts (SRs) and reorganising the existing receipts into senior and subordinate tranches’. 

This crackdown from the RBI happened in response to the Group’s failure to address and rectify regulatory deficiencies. 

The RBI observed that both the subsidiary units were ‘acting in concert’ by undertaking multiple structured transactions for ‘evergreening stressed exposure of ECL, using the EARCL platform and connected AIFs, in turn, circumventing applicable regulations’. Evergreening refers to the lenders providing fresh loans to borrowers who have been struggling.

The report quoted the central bank and said, “Instead of taking meaningful remedial action to rectify the said deficiencies, it was observed that the group entities were resorting to new ways to circumvent regulations.”

In response to the bank’s order, EARC replied that it is currently reviewing the said notice and will be looking into the observations included in the order. 

Bansal has been heading EARC since April 2018. He is a seasoned banking professional with more than three decades of experience in both development and commercial banking.