Wednesday was a day of great turmoil for the Edelweiss Group, which operates in the country’s financial sector. The Reserve Bank of India (RBI) regulator took major action and imposed several restrictions on the group’s two main companies, ECL Finance and Edelweiss Asset Reconstruction Company. Find out what this whole thing is about…
In fact, the central bank has imposed these restrictions using its powers under the SARFAESI Act (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002). At the same time, under the RBI Act, 1934, it has many such powers.
These restrictions were imposed on the companies of the Edelweiss Group.
The RBI has imposed many restrictions on the businesses of these Edelweiss Group companies. In this regard, ECL Finance Limited has been prohibited from accepting any type of structured transaction in relation to its wholesale business with immediate effect. However, the company can generally perform other tasks besides closing accounts or making loan payments.
Edelweiss Asset Reconstruction Company Limited, another Edelweiss Group company, has been prohibited from acquiring any type of financial assets. This includes banning security receipts and reorganizing existing security receipts.
Why did the RBI take action?
During the investigation of ECL Finance Limited, the RBI found that the company had entered incorrect information in its loan book. Erroneous information was also sent to the Central Repository of Information on the Large Credit System. And the Know Your Customer (KYC) guidelines were not followed properly. Therefore the operation of the company was prohibited. At the same time, restrictions have been imposed on Edelweiss Asset Reconstruction Company Limited for violating various supervisory provisions of the RBI.
