MUMBAI: The Reserve Bank of India (RBI) on Monday superseded the board of directors of SREI Infrastructure Finance and SREI Equipment Finance, owing to governance concerns and defaults by the SREI Group companies and has appointed an administrator to take over the management of the companies. 

A statement released by the RBI said, "In exercise of the powers conferred under Section 45-IE (1) of the Reserve Bank of India Act, 1934, the Reserve Bank has today superseded the Board of Directors of SREI Infrastructure Finance Limited and SREI Equipment Finance, owing to governance concerns and defaults by the aforesaid companies in meeting their various payment obligations."

The development comes a week after creditors of the SREI Group rejected the top management’s proposal to grant the company a one-year standstill from any action – legal or otherwise – to recover dues estimated at around Rs 30,000 crore. 

The central bank has announced the appointment of Rajneesh Sharma, the former chief general manager of Bank of Baroda, as administrator. The RBI will soon initiate the process of resolutions of the NBFCs under the Insolvency and Bankruptcy Rules 2019 and apply to the NCLT for appointing the Administrator as Insolvency Resolution Professional. 

The SREI Group cumulatively owes more than Rs 30,000 crore to the banks, and the banks had approached the RBI for a resolution similar to that of DHFL, which was acquired by the Piramal Group for Rs 38,000 crore.