Religare Finvest Repays All Of Its External Debt, Resolves Legacy Issues

Religare Finvest Ltd., a wholly-owned subsidiary of Religare Enterprises Ltd., has cleared all its debts with external lenders, in turn resolving all legacy issues, the company said in an exchange filing on Monday.

This has made the company free from any external debt "with no subsisting default,"  Religare said.

This comes after the State Bank of India struck down Religare Finvest from its central fraud registry database in January, after a court order from the Delhi High Court. It could mean the start of a fresh lending business for Religare Finvest.

In 2018, the RBI put Religare Finvest, which is a lending arm for Religare Enterprises, under its corrective action plan on account of large-scale syphoning of funds. More than Rs 2,000 crore was involved in the money laundering case carried out in complicity with officials from Lakshmi Vilas Bank.

Religare's erstwhile promoters, Malvinder Singh and Shivinder Singh, served jail time on the grounds that the Singh brother diverted funds between 2014 and 2017 to 19 companies.

After banks raised alarm, the board of Religare Enterprises was reconstituted. Following this, Rashmi Saluja took over as chairman of Religare Enterprises in 2020.

The debt resolution is significant as Religare Finvest, in March 2023, repaid 16 lenders a sum of Rs 2,178 crore in a one-time settlement.

Meanwhile, the Burman family, which is the largest shareholder entity, has been raising its stake in the financial services company. On Jan. 31, the Burman family acquired an additional 4% stake in Religare Enterprises, raising their holding to the upper limit of 25.18%. This means that the Burmans will have a major say in all decisions related to Religare Enterprises.

In the quarter ended December, Religare Enterprises reported a standalone Rs 25.78 crore net loss, which has widened over twofold from the same quarter a year ago. Net sales stood at Rs 3.61 crore in the third quarter, down 39.2% from Rs 5.94 crore a year ago. Ebitda, the key metric for profitability, was negative at Rs 18.1 crore in the reporting quarter, down from Rs 5.51 crore in the previous year.

With the external debt settlement out of the way, Religare Finvest is prepared to resume operations, once the RBI frees the company from its corrective action plan.