The completion of OTS has paved the way for RFL to come out of the Corrective Action Plan (CAP) imposed by the Reserve Bank of India in January 2018, due to its weak financial health
Religare Enterprises Limited (REL) on Thursday said its wholly-owned subsidiary Religare Finvest Limited (RFL), has completed the One-Time-Settlement (OTS) with 16 lenders by making a full and final payment of Rs 400 crore. The OTS was completed on March 8, nearly a month in advance before the deadline, as per the settlement agreement with the lenders dated December 30, 2022.
The settlement is the last milestone for the closure of the legacy issues, which emanated from the misconduct of the erstwhile promoters, said REL executive chairperson Rashmi Saluja. Since January 2018, when the new management took over, RFL has repaid over Rs 9,000 crores to its lenders from its collections and through the support of REL, she said.
This settlement paves the way for restarting business of RFL and focusing on building a niche in the Micro, Small & Medium Enterprises (MSME) lending space, she said, adding RFL will have a healthy balance sheet to sustain business growth in the next few quarters.
In continuation of its objective of focussing on the rapid growth of its affordable housing finance business, she said, RFL's subsidiary, Religare Housing Development Finance Corporation Limited (RHDFCL), will be made a direct subsidiary of REL in due course.
The OTS is one of its kind revival wherein the management has been able to conclude the legacy issues faced by Religare Group on account of fraudulent activities of erstwhile promoters and has still paid a significant amount to lenders while preserving the long-term value of the Group, she said.
"We are grateful to our regulators and our lenders, who have put faith in the governance and revival initiatives of the new management... Religare 2.0 will be able to grow faster, as well as a foray into newer businesses to become a 360-degree financial services group and enhance value for all its stakeholders," she said.
RFL CEO Pankaj Sharma said post the one-time settlement, RFL has embarked on its journey to revive its business, having achieved a critical milestone to strengthen its financials and meet regulatory ratios.Going forward, he said, RFL will continue to focus on lending to MSMEs by building a granular book and creating a niche in this important segment for growth of the Indian economy.
The completion of OTS has paved the way for RFL to come out of the Corrective Action Plan (CAP) imposed by the Reserve Bank of India in January 2018, due to its weak financial health.
RFL has been in financial distress due to the alleged misappropriation of funds by erstwhile promoters Shivinder Singh and his brother Malvinder Singh. Capital markets regulator Sebi earlier this year imposed a penalty totalling Rs 60 crore on 10 entities, including the Singh brothers in a case involving the diversion of funds of RFL.
In addition, the Singh brothers have been barred from the securities market for three years, or till the recovery of the diverted money along with interest, while other entities have been prohibited for two years.