The Reserve Bank of India (RBI) has rejected the reappointment of Rajkumar Bansal as Edelweiss Asset Reconstruction Co’s (ARC) Managing Director and Chief Executive Officer.
The company announced this development via a statement to the stock exchanges and did not furnish any further details regarding the reasons for the RBI's move.
The development came after the Central Bank had instructed the Edelweiss ARC to refrain from acquiring any stressed assets.
Last month, the RBI highlighted 'material concerns' stemming from the conduct of group entities.
These concerns arose from a series of transactions aimed at evergreening the stressed exposures of the ARC's sister company - ECL Finance.
In its notification, the regulator also barred ECL Finance from undertaking any structured transactions, with respect to its wholesale exposures, with immediate effect. However, it can continue to conduct repayment and/or closure of accounts.
Additionally, the finance regulator has instructed both companies to enhance their assurance functions for regulatory compliance.
The restrictions imposed will only be reconsidered after satisfactory rectification, as per the RBI's standards.
Following these developments, shares of the parent company - Edelweiss Financial Services - have declined by 8.2 per cent to date.
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