SBI removes fraud tag from Religare Finvest after high court order

In a significant development, the State Bank of India (SBI), one of the lenders of Religare Finvest Limited (RFL), has removed RFL’s record, reported by it as fraud, from the Central Fraud Registry database. This decision follows an order dated 18 December 2023 from the Delhi High Court directing SBI to remove the fraud tag.

SBI informed RFL on 25^th January through a formal communication.

In March 2023, Religare Finvest, a wholly owned subsidiary of Religare Enterprises Limited (REL), achieved a key milestone when it completed a One-Time Settlement (OTS) with 16 lenders through organic collections. The Company paid more than Rs 9000 crores to the country’s banking system.

Currently, RFL is awaiting the lifting of the Corrective Action Plan (CAP) imposed on RFL by the Reserve Bank of India (RBI) in January 2018.

Commenting on the development, Dr Rashmi Saluja, Executive Chairperson, REL & CMD RFL said, “We are pleased to witness the positive outcome of our efforts. The removal of the ‘fraud’ tag stands as a testament to the commitment and dedication of the Company’s Board, management and employees in resurrecting RFL and the Group from the brink in the aftermath of fraud perpetrated by the erstwhile promoters and their affiliates and putting it on the path of growth and development. This is pivotal step in the revival of RFL.”

Mr Pankaj Sharma, Chief Executive Officer, RFL said, “The announcement holds great significance for the Company, as it will open doors for our strategic path towards achieving growth. RFL eagerly awaits the much-anticipated removal of the RBI Corrective Action Plan (CAP) that was put into effect in January 2018.”

The Central Fraud Registry, established under the Reserve Bank of India (Frauds Classification and Reporting by Commercial Banks and Select FIs) Directions, 2016, is a web-based and searchable database on frauds reported by commercial banks and select financial institutions in terms of Master Directions on classification and reporting of frauds.

Meanwhile, the Enforcement Directorate  on 23^rd January conducted raids at three premises of Essel Group companies in Mumbai as part of its probe into the Rs 150-crore loan fraud case involving Religare Finvest Limited, an NBFC of Religare Group.

The premises covered during the search operation belong to Konti Infrapower & Multiventures Pvt Ltd, Edison Infrapower & Multiventures Pvt Ltd, Asian Satellite Broadcast Ltd, Widescreen Holdings Pvt Ltd, Jayneer Capital Pvt Ltd, and Sprit Infrapower & Multiventures Pvt Ltd. Residential premises of an ex- senior official of the Essel group was also raided.

According to ED, the raids have resulted in the recovery of incriminating documents and recording of spot statements of the officials of the companies under the provisions of Prevention of Money Laundering Act .

ED initiated investigation on the basis of FIR registered by Economic offence wings, Delhi Police wherein Religare Finvest made allegations against the following four companies of hatching a criminal conspiracy for causing wrongful loss to RFL by defaulting on a loan of Rs 150 Crore.

The loan was given in March 2014 to the group companies of Essel — Rs 50 crore to Konti Infrapower & Multiventures; Rs 40 Crore to Widescreen Holdings Pvt Ltd; Rs 50 Crore to Edison Infrapower & Multiventures Pvt Ltd and Rs 10 Crore to Asian Satellite Broadcast Pvt Ltd.

According to the ED, these companies defaulted on the loan by fraudulently executing settlement agreements in January 2018 in connivance with erstwhile management and officials of RFL.

Also Read: Changes in RBI’s new Master Direction for wilful defaulters