India's Edelweiss Financial Services slumps after cenbank action on units

Edelweiss Financial Services

30/05/2024 05:14

BENGALURU, May 30 (Reuters) - Shares of Edelweiss
Financial Services  EDEL.NS  fell as much as 15.8% on Thursday,
marking its sharpest intraday fall in more than four years,
after India's central bank barred two of its units from
acquiring financial assets or undertaking structured
transactions. 
    The company's shares were down 12% as of 9:40 a.m. IST,
having earlier hit its lowest level since April 1.
    The entities, Edelweiss Asset Reconstruction Co Ltd (EARCL)
and non-bank firm ECL Finance (ECL), had entered into a series
of structured transactions for evergreening stressed loans of
ECL, the Reserve Bank of India said in a release on Wednesday.
    ECL Finance took over loans from non-lender entities of the
Edelweiss Group to sell them to EARCL, circumventing
regulations, the central bank added.
    According to the central bank's norms, asset reconstruction
companies (ARC) can acquire financial assets only from banks and
financial institutions.
    In an exchange filing, ECL Finance said the RBI order will
not have any material impact on its businesses, while EARCL said
its resolution and recovery efforts will continue normally.
    
    
    
     
    
    

 (Reporting by Nishit Navin; Editing by Eileen Soreng)
 ((Nishit.Navin@thomsonreuters.com;))