RBI’s Intensified Oversight Leads to Restrictive Measures on Multiple Financial Firms

The Reserve Bank of India (RBI) has intensified its scrutiny of financial institutions, leading to a series of supervisory restrictions on banks and other financial firms. The latest to face these restrictions are two companies under the Edelweiss Group, penalized for the ‘evergreening’ of distressed assets.

On Tuesday, the RBI announced sanctions on Edelweiss Asset Reconstruction Co Ltd (EARCL) and non-banking financial company ECL Finance (ECL). The central bank’s action prevents these firms from acquiring financial assets or engaging in structured transactions.

This decision stems from findings that both firms were involved in a series of structured transactions aimed at evergreening stressed loans.