New Delhi The Reserve Bank of India (RBI), as the regulator of non-bank lenders and as the watchdog of the Securities and Exchange Board of India (SEBI) listed companies, will lead the investigation into allegations of corporate governance lapses at PTC India Financial. Services Limited (PFS), while the government will closely monitor the situation and wait for an assessment of the company’s affairs, said a government official.
The allegations mainly pertain to the appointment of a chief financial officer and alleged change in loan terms in an account. The person said that the extent of damage due to any alleged governance lapse should be assessed before taking any coercive action. “Assessing the damage, if any, is a priority. At the same time, there is a need to assess whether the allegation is a matter of difference of opinion within the Board or material lapse in governance.
The RBI is the front-line regulator for non-bank lenders, including any action such as the appointment of an administrator to replace the board after the 2019 rule changes under the Insolvency Code. In the case of non-bank lender Infrastructure Leasing and Financial Services Ltd (IL&FS), which defaulted on payment obligations in 2018, the government asked the National Company Law Tribunal (NCLT) to replace the board in the absence of a specific mandate. was contacted. RBI for this.
The Ministry of Corporate Affairs is an umbrella organization for all listed and unlisted companies, but the regional regulators oversee the additional regulatory requirements specified by them. If any inspection of the books is done by the Registrar of Companies, the Director General of Corporate Affairs will look into the same, said the person requesting anonymity. All non-banking financial companies are registered as companies and most of them, except housing finance companies, merchant banks, venture capital fund companies and a few others, also require RBI registration.
RBI and SEBI will assess whether the allegations go beyond mere differences of opinion. The person cited above stated that the cases of governance lapse including those raised by the disputed shareholders solely on the basis of differences of opinion have not survived.
A PFS spokesperson said, “The company is in regular touch with SEBI on the above issues. The queries received are being answered accordingly.” There was no official response to a request for comment from the ministries of corporate affairs or finance.
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