Banks target Sintex, NBFCs for insolvency proceedings

MUMBAI: Lenders are set to initiate insolvency proceedings against Sintex Industries. They will also initiate the proceedings against non-banking finance companies (NBFCs) Religare Finvest (RFL), Reliance Home Finance and Reliance Commercial, and will seek permission from the RBI for the same.

The move to initiate insolvency proceedings follows the expiry of the six-month deadline for resolving the default in respect of these companies. In terms of the RBI’s June 2019 circular, banks are required to make additional provisions for defaults that are unresolved, and insolvency proceedings are not initiated.

In March 2019, Sintex had informed the exchanges that it had defaulted on bond repayments. The company then submitted a restructuring plan, which was rejected by lenders, who decided to put it on the block through the restructuring route. In the case of RFL, the company became the victim of a fraud by its former promoters. The other two NBFCs — Reliance Home Finance and Reliance Commercial — are part of the Reliance Capital group that had defaulted last year.

The decision by the lenders was revealed by Bank of India MD & CEO A K Das while announcing the results.

RFL executives said it “has already submitted the revised debt resolution plan on April 28, 2020 to lead banker and subsequently the same was presented and discussed with core committee of lenders on May 04, 2020 and June 03, 2020 (including Bank of India)”.

“Further, the same is under active consideration by all the lenders. Additionally, the RBI has been kept informed about all developments.”