Religare Finvest Ltd (RFL) has defaulted on interest payment to the bond holders due on February 25 due to asset liability mismatch arising out of siphoning and misappropriation of funds by erstwhile promoters of its parent company Religare Enterprises Ltd, a regulatory filing said on Saturday.

RFL, a subsidiary of Religare Enterprises Ltd (REL), was put under the Corrective Action Plan (CAP) by the Reserve Bank of India in January 2018 due to issues emanating from siphoning and misappropriation of funds by erstwhile promoters of REL and their associates.

“Due to these reasons, the company faced significant asset liability mismatches,” REL said in a regulatory filing.

The company said RFL defaulted on interest payment for an amount of Rs 96,00,000 (Rs 0.9600 crore) towards non-convertible debentures (NCDs) due on February 25, 2022.

The company said there are two investors in the security (NCDs) on which the default has been reported. The bonds, with tenure of 10 years were issued on private placement basis of Rs 10,00,000/- each for cash at par for up to Rs 8 crore on February 25, 2013, and carry coupon at 12 per cent per annum.

A debt resolution plan (DRP) was submitted to the lenders by RFL with TCG as an investor, in order to address the asset liability mismatch.

“However, the same was not acceded to by RBI as per the letter received in March 2020. The company, to revive its business and to ensure proper alignment of its asset liability profile, submitted a revised DRP with REL continuing as promoter/shareholder of RFL in compliance with Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions 2019 dated 7 June 2019 (“RBI Prudential Framework”),” it said.

Further, RFL received a communication from RBI on February 11, 2022, advising that restructuring of the company cannot be implemented with REL continuing as its promoter, as the RFL has been declared an “fraud” exposure by lenders, the filing stated.

RFL has filed a writ petition in the Delhi High Court seeking stay of operation of the aforesaid order besides other reliefs earlier this month.

The Delhi High Court has directed that till the next date of hearing, which is March 28, 2022, the operation of the impugned communication dated February 11, 2022 (from RBI) will remain stayed, the filing added.

Besides, the lenders of RFL have advised that all payments of the company need prior certification from ASM (Agencies of Specialised Monitoring) appointed by them.

However, the approval from ASM was not received for payments towards the due interest and due to this, “the company shall not be in a position to service/pay interest of the aforementioned NCDs to the eligible debenture holders on the approaching interest payment date (February 25, 2022)”.

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 of about Rs 4,000 crore. State Bank of India (SBI) is the lead banker to the 18-lender consortium.

However, Religare Enterprises Ltd last week said it has challenged lenders’ tagging its debt-ridden subsidiary Religare Finvest Ltd (RFL) as a fraud account. RFL, a non-banking financial company of REL, has been barred from undertaking fresh business as it is under the corrective action plan of the Reserve Bank of India (RBI) since January 2018.