“The action is based on material concerns observed during the course of supervisory examinations, essentially arising out of the conduct of the group entities acting in concert, by entering into a series of structured transactions for evergreening stressed exposures of ECL, using the platform of EARCL and connected AIFs, thereby circumventing applicable regulations. Incorrect valuation of SRs was also observed in both ECL and EARC,” the RBI said.
The Reserve Bank of India has directed the company to cease and desist from undertaking any structured transactions in respect of its wholesale exposures (other than repayment or closure of accounts) in its normal course of business with immediate effect.
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“In the last Financial Year, the company passed a Board Resolution to discontinue this business, which was disclosed in its financial statements for the period ending 31 March 2024. The Company, therefore, believes these directions will not materially impact its strategy and its business. Reduction of the wholesale exposure will continue as permitted, in the normal course of business,” said Edelweiss in a filing to the exchanges.
The order is directed for 2 Edelweiss companies, i.e., Edelweiss Asset Reconstruction Company and ECL Finance.
Edelweiss stated that it will take the necessary actions immediately after reviewing the order and will address the observations mentioned.
“We are reviewing the order and will address the observations mentioned in the RBI order. We are dedicated to maintaining transparency and upholding the highest standards of corporate governance and committed to compliance with regulatory requirements,” said Edelweiss in the company filing.
After the update, Edelweiss Financial shares dropped below all its significant exponential moving averages, however, retained a neutral level of about 47 on the RSI as per the Trendlyne data.
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