RBI Initiates Special Audit Of SREI Group Firms
A special audit is typically undertaken if there is a sharp deterioration in the quality a lender’s book.
SREI Infrastructure Finance Ltd. has informed the exchanges that a regulatory special audit is being conducted on the non-bank lender and its subsidiary.
“We’d like to inform you that a special audit of the Company and its subsidiary, Srei Equipment Finance Ltd. is being undertaken by an auditor appointed by Reserve Bank of India in exercise of its powers under Section 45 MA(3) of the RBI Act, 1934,” the company said in a statement.
A special audit is typically undertaken if there is a sharp deterioration in the quality of lender’s book.
The 35-year-old non-bank lender is among those that saw new business stall and liquidity dry up earlier this year. The fall of IL&FS in 2018 had already led to a deterioration in market conditions and the Covid-19 outbreak worsened the environment for some NBFCs.
In August, BloombergQuint reported that the lender was looking at mergers with a bank as a possible survival strategy, although there was no specific deal on the table.
The lender has been shrinking its balance sheet. As of March 2018, the company’s consolidated advances book stood at Rs 37,884 crore. The loan book fell to Rs 35,222 crore as of March 31, 2020. Total borrowings were at Rs 32,319 crore. It owes banks nearly Rs 18,500 crore.
In the September quarter, SREI Infra reported a 91% drop in net profit to Rs 4.75 crore compared to Rs 55.4 crore in the year ago quarter.