Religare Finvest's lenders to take 57% haircut as they approve Rs 2,300-cr one-time settlement of outstanding dues

Religare Finvest, the NBFC arm of Religare Enterprises, on Friday made a one-time settlement on outstanding dues with 16 lenders.

Religare Finvest owed Rs 5,344 crore to 16 lenders including SBI, Bank of Baroda and Punjab National Bank. Religare Enterprises had proposed Rs 2,320 crore as one-time settlement for Religare Finvest.

The other banks that approved the one-time settlement are Union Bank of India, Canara Bank, Bank of India, SIDBI, Central Bank of India, UCO Bank, IDBI Bank, Punjab & Sind Bank, Bank of Maharashtra, 
South Indian Bank, Karnataka Bank, Karur Vysya Bank, Federal Bank.

With lenders approving this settlement, they will be taking a 57% haircut.

"Led by a new management and a professionally run Board since 2018, the Religare Group has been making positive strides to grow each of its individual entities and has worked tirelessly in order to progress and provide stability backed by strong corporate governance at its core," said Religare Enterprises in a stock exchange filing. 

"RFL has been taking necessary corrective measures as advised by the Reserve Bank of India and it will seek removal of the CAP (Corrective Action Plan) in due course so that RFL can restart its lending business," added REL. 

Speaking on this development, Rashmi Saluja, Executive Chairperson of Religare Enterprises Limited said, “This is a very positive and significant move in the history of our company. Our tireless efforts and representations to our lenders have shown positive results and we appreciate their backing and support at this critical juncture. This move takes us closer to our vision of turning the Religare Group into a 360-degree financial services conglomerate.”

On Friday, Religare Enterprises' shares closed 0.14% lower at Rs 174.2 apiece. 

In May 2022, Religare Enterprises and Religare Finvest settled with markets regulator Sebi a case pertaining to alleged financial mismanagement and diversion of funds after collectively paying Rs 10.5 crore towards settlement fees.

Individually, Religare Enterprises Ltd (REL) and Religare Finvest Ltd (RFL) paid Rs 5.42 crore and Rs 5.08 crore towards settlement amount respectively, the Securities and Exchange Board of India (Sebi) said in a settlement order.

The order came after the two companies filed an application with Sebi proposing to settle the regulatory violations ''without admitting or denying the findings'' through a settlement order.

Sebi had received complaints alleging financial mismanagement and diversion of funds primarily in RFL for the benefit of the promoters/promoter group companies.

Thereafter, the regulator conducted an investigation wherein it was observed that RFL was part of a fraudulent and deceptive scheme and acted in a fraudulent manner, which led to diversion of funds to the tune of Rs 2,473.66 crore through a material subsidiary of REL for the ultimate benefit of promoters, the order noted.