No fraud or funds diversion in RCFL; boost for lenders

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New Delhi, Jan 12 (IANS) An independent forensic audit in Reliance Commercial Finance Limited (RCFL) does not have any adverse findings on any fraud, embezzlement, diversion or siphoning of funds by the company, its promoters or employees.

The clear signal from the forensic audit marks a boost for 22 lenders to recover 100 per cent through resolution plans as per RBI guidelines.

The forensic audit conducted by Grant Thornton was mandated by the lenders of RCFL which has been completed. RCFL has made a similar disclosure to Reliance Home Finance Limited (RHFL) on the forensic audit and no adverse findings being found.

The forensic audit is part of the debt resolution process, as per RBI guidelines on prudential framework.

The forensic auditors have submitted their report, and there are no adverse findings recorded on 11 key parameters: Promoter, company, employees, associates, diversion & siphoning of funds, embezzlement, malafide operations, falsification of accounts, fraudulent transactions and detection of fraud.

Since September 2018, the company has not accessed any fresh loans or incremental borrowings other than by way of securitization. “The Company is thus already observing a self-imposed restraint on accessing the public funds for more than 15 months”, RCFL said in a statement.

The other findings in the forensic audit report are limited to the issues with respect to alleged regulatory anomalies as regards group exposure and alleged deviation from certain policies and procedures.

“The Regulator, Reserve Bank of India (RBI), to whom all the facts have been provided before the commencement of the forensic audit, had already taken due note of the same, and has directed the Company not to access ‘public funds’ and not to take any further exposure with immediate effect until further notice,” the company said.

Based on completion of the forensic audit, the RCFL has requested its bankers to proceed on a fast-track basis with the debt resolution plan under ‘change of management and control’ in the overall interests of all lenders.

The forensic report has confirmed the potential group entities’ exposure through several intermediate unlisted entities at Rs 4,427.74 crore (including interest), which the company had voluntarily and publicly disclosed even before the commencement of forensic audit to its auditors, regulators, lenders, and also in the latest annual financial statements which were duly approved by the shareholders.

“This media release is being issued to protect the interests of all stakeholders and address any misinformation arising out of mischievous selective leakage of the forensic audit report by vested interests in an attempt to derail the Company’s debt resolution plans”, RCFL said.

–IANS

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