look news india
The Reserve Bank of India (RBI) has imposed certain restrictions on a company that is engaged in the business of asset reconstruction and lending to Edelweiss Juths from providing second line loans to repay non-performing loans, i.e. evergreen loans.
In an order issued on Wednesday by the central bank to ECL Finance Limited, the company lending to Juth, it said that the company can no longer make any new deal in its lending business and can only take the loan that it has to repay and close it. Loan accounts will be enabled. In an order to Juth's asset reconstruction company Edelweiss ARC Limited, the RBI said that it cannot acquire any new economic assets. This also includes the deal of restructuring of existing SRs and accepting any type of security receipt. As RBI has said in both the orders, this ban will come into effect with immediate effect.
Such a ban has been imposed after flaws came to light during the inspection conducted by RBI of these two companies. For the stressed loans of ACL, loans were given to Evergreening using the platform of EARC and thus both the companies were in collusion with each other. Alternative Investment Funds (AIFs) associated with both the companies were also used for such irregularities.
