Will Recover Money From LVB, Officials Won't Be Pardoned: Religare Chief

Religare Enterprises Ltd has said its NBFC arm Religare Finvest Ltd (RFL) will be able to fully recover its fixed deposits, with an interest, of around Rs 950 crore from debt-ridden Lakshmi Vilas Bank (LVB), whose officials allegedly misappropriated the FD amount in connivance with erstwhile Religare promoters Singh brothers.

LVB had set off FDs of Rs 750 crore as recovery for loans given to the erstwhile promoters and their private entities without authorisation, Religare Enterprises Chairperson Rashmi Saluja told PTI.

She added that RFL is following up the case for recovery and punishment to the perpetrators of the fraud.

"There are legal cases that have been filed by us for recovery of money. Because of proactive approach of the company for justice, erstwhile promoters and management are in jail because they siphoned off the money," Saluja said.

She added that the bank officials will also not be pardoned, who allegedly misappropriated the FD amount to adjust against the money borrowed by former promoters and their private companies.

"We complained to the Economic Offences Wing (of Delhi Police). They investigated the case thoroughly and found that Lakshmi Vilas Bank officials were in cahoots with former promoters to misappropriate the FD. Accounting for interest, the bank owes Rs 950 crore to Religare Finvest," she said.

Emphasising that RFL was on a strong ground and wanted money back, Saluja said investigative agencies, including the Enforcement Directorate, are working on it and RFL is hopeful of recovery from both LVB and Singh brothers.

She took charge of the group in 2018 as the board was reconstituted after the ouster of the Singh brothers.

The fraud done by erstwhile promoters caused a damage of about Rs 4,000 crore to RFL through "unlawful and illegal actions", she said.

Saluja added that this included a corporate loan book fraud of about Rs 2,300 crore, FDs and interests thereof at Rs 950 crore and other irregularities.

Last month, Delhi Police arrested two former employees of Lakshmi Vilas Bank for their alleged involvement in misappropriation of fixed deposit receipts worth Rs 729 crore of RFL.

According to the police, grave irregularities and flouting of rules and regulations by officials of the bank in sanctioning of loans were noticed during the course of investigation.

RFL has been in financial distress due to alleged misappropriation of funds by erstwhile promoters Shivinder Singh and his brother Malvinder Singh. Multiple investigative agencies are probing the case of financial bungling.

The company has been barred from undertaking fresh business as it is under corrective action plan (CAP) of the Reserve Bank of India (RBI) since January 2018 due its weak financial health.

As part of its effort to clear debt of lenders, Saluja said the company has repaid close to Rs 6,500 crore since 2018 despite being constrained by the corrective action plan.

In March alone, the company has repaid about Rs 875 crore to banks, she said.

The total outstanding debt stands at Rs 4,600 crore and most of them are secured loans, she said.

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor