Reserve Bank of India (RBI) has lifted the business restrictions on Edelweiss Group’s NBFCs, ECL Finance and Edelweiss Asset Reconstruction Co (ARC) after being satisfied with the remedial measures put by both companies.
“Having satisfied itself based on submissions and remedial measures put in place by these companies to address the concerns of RBI and their commitment to ensure adherence to the regulatory guidelines at all times and on an ongoing basis, the Reserve Bank has decided to lift the afore-mentioned restrictions placed on ECL Finance Limited and Edelweiss Asset Reconstruction Company Limited, with immediate effect,” RBI said in a press release.
On May 29, RBI had imposed restrictions on both companies for what it described as ‘material’ transgressions that allegedly involved ‘evergreening of stressed assets’. ECL Finance was directed to cease and desist from undertaking any structured transactions in respect of its wholesale exposures, other than repayment and/ or closure of accounts while Edelweiss ARC was directed to stop acquisition of financial assets including security receipts (SRs) and reorganising the existing SRs into senior and subordinate tranches.
The group entities engaged in structured transactions to allegedly evergreen stressed exposures of ECL, using EARCL and connected Alternative Investment Funds (AIFs), which circumvented regulations.
