The Reserve Bank of India (RBI) has taken major action against Edelweiss Group. Two of its companies, ECL Finance and Edelweiss Asset Reconstruction Company, have been banned from functioning. RBI said on Wednesday that irregularities have been found in both companies’ working methods.
RBI’s Order Came Into Effect With Immediate Effect
RBI has directed Edelweiss Group to implement this order immediately. According to the instructions, ECL Finance’s wholesale transactions have been banned. The company can only make repayments and close accounts.
Edelweiss ARC has been asked to ban financial assets, including security receipts. The central bank said many irregularities were found in the investigation against these Edelweiss Group companies. Both companies had evaluated security receipts incorrectly. They are accused of presenting incorrect details of the debt book, not following the norms for giving loans against shares, giving incorrect information to the Central Repository, and not following the Know Your Customer (KYC Rules) guidelines properly.
Companies Were Looking For New Ways To Violate The Rules
RBI said that despite giving instructions to rectify the deficiencies, both these companies were looking for new ways to violate the rules. In the last few months, we have discussed these problems several times with their senior management and auditors, but no solution has been found. Therefore, we had to ban their business. RBI said that the ban imposed on their business would be reviewed later.
Action Has Been Taken Against Many Financial Companies This Year
According to the Money Control report, the central bank also took action against two NBFCs, JM Financial Products and IIFL Finance, at the beginning of the year. Since then, the possibility of action against other companies has been expressed. Paytm Payments Bank has also become a victim of RBI’s action in the case of rule violation.
