SREI Mutual Fund Surrenders Registration Certificate
Moneylife Digital Team 22 October 2021
SREI Mutual Fund Asset Management Pvt Ltd (SREI AMC) has surrendered the registration certificate granted to SREI Mutual Fund Infrastructure Debt Fund (IDF) by the Securities & Exchange Board of India (SEBI).
In a release, the market regulator says it has accepted the request for surrender of the certificate of registration of SREI MF and, consequently, the MF has ceased to exist as a mutual fund from 22 October 2021.
SREI MF will continue to be responsible for all the liabilities and obligations which may arise for the period before the surrender of the certificate of registration, SEBI says. SREI AMC is owned by Srei Infrastructure Finance Ltd (SIFL).
Earlier this month, the Reserve Bank of India (RBI) superseded the boards of SIFL and Srei Equipment Finance Ltd (SEFL) due to governance concerns and defaults. RBI appointed Rajneesh Sharma, former chief general manager (CGM) of Bank of Baroda as an administrator of these companies.
In a release, the central bank says, "The Reserve Bank also intends to shortly initiate the process of resolution of the two non-banking finance companies (NBFCs) under the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 and would also apply to the National Company Law Tribunal (NCLT) for appointing the administrator as the insolvency resolution professional (IRP)."
Srei group, however, expressed shock at RBI's decision. In a statement, a spokesperson of the Srei group says, "We are shocked by the RBI's move as banks have been regularly appropriating funds from the escrow account they have controlled since November 2020. Moreover, we have not received any communications from banks on any defaults. We are also surprised because the NCLT order for all creditors is still in process. There is also an order for "no coercive measures" by the creditors and regulators. We will take all necessary steps as advised by our lawyers in this regard."
However, he says, "we had submitted a proposal to pay the full amount to banks under a scheme filed under Section 230 of the Companies Act 2013 in October 2020. However, they have neither accepted the scheme nor proposed a payment schedule acceptable to them."
Kolkata-headquartered Srei group, which includes SIFL and SIFL's wholly-owned subsidiary SEFL, have been under stress for about a year now. (Read: SREI's Rs35,000 Crore Loan May Be Classified as NPA as NCLAT Sets Aside NCLT Order; Rakesh Bhutoria Quits)
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