After banks, regulators to appeal against NCLT order, BFSI News, ET BFSI

After banks, regulators, including the RBI, are set to appeal against an order of the National Company Law Tribunal’s (NCLT’s) Kolkata bench, which had allowed a moratorium on debt repayment by Srei Equipment Finance (SEFL). Some lenders have already moved the National Company Law Appellate Tribunal (NCLAT) to stay the order and appeal against it.

Banking sources told TOI that the RBI too will file a petition in the coming days as the NCLT had stopped all government or regulatory authorities from taking any coercive steps against the non-bank finance company, “including reporting in any form and/or changing the account status of the company from being a standard asset”.

“Credit rating agencies shall not consider any nonpayment to be a default and shall maintain the rating of SEFL at least that of investment grade,” an order issued late last month said.

The NCLT has asked the company to convene meetings of debenture holders, ECB lenders and perpetual debt instrument holders between May and July to work out a new scheme of arrangement. Earlier this month, CARE Ratings said it would continue to closely monitor the developments and is also seeking legal assistance.

SEFL had argued that the RBI allowed moratorium and loan restructuring for NBFC borrowers but finance companies were not given a moratorium. This along with the economic downturn in the wake of Covid-19, has led to an asset-liability mismatch, it argued.