Delhi High Court Quashes 'Fraud' Tag On Religare Finvest, Directs Banks To Remove Classification

Delhi High Court on Saturday has quashed the 'fraud' classification put on Religare Enterprises Ltd.'s subsidiary Religare Finvest Ltd. The court has directed the 14 respondent banks to take necessary steps to remove the 'fraud' classification from the RBI’s Central Fraud Registry within two weeks of the order.

The 14 banks are as follows: Central Bank of India; Bank of Baroda; Bank of India; Punjab and Sind Bank Ltd.; Punjab National Bank; Small Industries Development Bank of India; Syndicate Bank; UCO Bank; Federal Bank Ltd.; IDBI Bank Ltd.; Karnataka Bank Ltd.; Karur Vysya Bank; Axis Bank and South Indian Bank Ltd.

"In backdrop of above, it is to inform that RFL filed a writ petition before the High Court of Delhi, seeking quashing of respondent banks’ decision in classifying RFL’s account as fraud and further challenging the inclusion of RFL’s account in the RBI’s Central Fraud Registry under the RBI (Frauds Classification and Reporting by Commercial Banks and Select FIs) Directions, 2016," according to an exchange filing.

"The classification was challenged on the ground of failure of the lenders to provide RFL with an opportunity to show cause against such classification which essentially amounted to a derogation of principles of natural justice," the company shared.

Further, another ground of challenge was that no dues certificates have been received from each and every lender in light of the OTS, hence, no useful purpose shall be served by continuing the fraud classification of RFL's accounts, it added.

On July 23, the Reserve Bank of India withdrew all restrictions placed on Religare Finvest under the corrective action plan, marking the end of a more than seven-year-long regulatory curb. RFL received a letter from the RBI about lifting of the curbs with immediate effect, according to an exchange filing by REL.

The RBI had originally placed the company under a corrective action plan on Jan. 18, 2018, citing irregularities discovered during its inspection of its financials as of March 31, 2017.