Shares of Anil Ambani-owned firms declined in early trading after the Reserve Bank of India decided to supersede the board of Reliance Capital Ltd. owing to governance concerns and unpaid dues.
The RBI said it will initiate insolvency proceedings at the company shortly and has appointed Nageswar Rao Y, former executive director of Bank of Maharashtra, as administrator.
Shares of Reliance Capital Ltd. slumped 5% to trade at the lower circuit. The only outlier was Reliance Communications Ltd., which was trading up 2.9% at 10:10 a.m.
The unraveling of Reliance Capital is the first time an Ambani-promoted company will face the ignominy of insolvency. The reputational hit though will outweigh the monetary impact on the family, as shareholders and lenders bear the bigger brunt.
The company, in a statement on the exchanges, said it intends to fully cooperate with the administrator, adding that pending cases have delayed attempts at resolution so far.
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