Rel Cap’s Default to Yes Bank Triggered Insolvency Process

The RBI has cited Reliance Capital’s default to Yes Bank in respect of dues amounting to Rs 1,417 crore as a key default while initiating insolvency proceedings against the Anil Ambani group finance company, the Times of India reported. The National Company Law Tribunal on Monday admitted the insolvency proceedings and announced a moratorium in terms of the bankruptcy code. RCap had been classified as a defaulter by credit rating agencies two years ago and a resolution process initiated by the debenture trustee has been dragging on, hampered by litigation from creditors to group companies. In a letter dated December 2, 2021, Yes Bank informed the RBI that it had dues of Rs 1,417 crore. This was a principal amount of Rs 987 crore invested in the company’s debentures and Rs 430 crore as interest, which prompted the central bank to act. In its letter, Yes Bank submitted the report of RBI’s Central Repository of Information on Large Credits (CRILC) as on November 29, 2021, demonstrating that its exposure to RCap was classified as ‘doubtful’. Doubtful assets are those that have been classified as a non-performing asset (NPA) for more than 12 months, in accordance with the RBI’s norms on bad loans. Yes Bank had earlier acquired Reliance’s headquarters for Rs 1,200 crore, which was used to settle dues of Reliance Infrastructure. Read more.