SBI Removes 'Fraud' Label From Religare Finvest
The State Bank of India (SBI) has officially lifted the 'fraud' designation from Religare Finvest (RFL) following a Delhi High Court directive from December. This development opens the door for the non-bank financier to potentially resume lending activities. RFL, a wholly-owned subsidiary of Religare Enterprises (REL), had been placed under the Reserve Bank of India's corrective action plan since January 2018 due to significant fund diversion from both REL and RFL.
SBI's removal of RFL from the Central Fraud Registry database, initiated in 2016 by commercial banks and financial institutions to report fraud, was confirmed by REL in a filing to the stock exchanges. The current status of RFL involves awaiting the lifting of the corrective action plan.
The elimination of the 'fraud' label is seen as a reflection of the dedication and efforts of the company's board, management, and employees in restoring RFL and the group after the fraud committed by the previous promoters and their associates, according to Rashmi Saluja, Executive Chairperson of REL and CMD of RFL.
Malvinder Singh and Shivinder Mohan Singh, the former promoters of Religare, were accused of diverting funds through Religare Finvest between 2014 and 2017. They lost control of the company in 2018 as a result of legal actions taken by lenders and minority shareholders. The board of Religare Enterprises was reconstituted, with Rashmi Saluja assuming charge in 2020.
In March 2023, RFL reached a one-time settlement with 16 lenders, managing it through organic collections. The company, in a statement, highlighted that it has repaid over ₹9,000 crore to the Indian banking system.
Meanwhile, the Burman family, the largest shareholder entity, is attempting to gain control of the financial services entity, facing resistance from the Religare board. However, the Competition Commission of India approved the Burman family's plan to acquire additional stake in the company, along with an open offer, on Thursday.
