Edelweiss Asset Reconstruction Co said on Tuesday that the Reserve Bank of India has rejected the re-appointment of Rajkumar Bansal as the company's managing director and chief executive officer, according to a statement to the exchanges.
The development occurs nearly two weeks after the country's central bank and financial regulator instructed the ARC to refrain from acquiring any stressed assets.
Edelweiss ARC did not furnish any further details regarding the reasons for the RBI's rejection or its forthcoming plans.
Last month, the regulator 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.
The recent supervisory action—initiated nearly two weeks ago—was prompted by RBI's observation of a lack of 'meaningful corrective action' despite engagements with senior management and statutory auditors over the past few months.
Additionally, the 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 RBI's standards.
Following these developments, shares of the parent company—Edelweiss Financial Services—have declined by 8.2% so far. In contrast, the country's benchmark NSE Nifty 50 witnessed a 2.4% advance during the same period.
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