RBI keeps tabs on Edelweiss, ARC arm’s biz

Mumbai: The Reserve Bank of India (RBI) on Wednesday imposed business restrictions on Edelweiss Group’s lending and asset reconstruction arms on concerns over evergreening of loans.

The central bank has asked ECL Finance Ltd (ECL) to cease and desist from undertaking any structured transactions in respect of its wholesale exposures, other than repayment and/or closure of accounts, an official statement said. In the case of Edelweiss Asset Reconstruction Company Ltd (EARCL), the RBI has asked the entity to cease and desist from acquisition of financial assets, including security receipts (SRs) and reorganising the existing SRs, into senior and subordinate tranches. Both the actions are with immediate effect, the RBI statement said. “The action is based on material concerns observed during the course of supervisory examinations, essentially arising out of conduct of the group entities acting in concert,” it said.