Edelweiss Financial share price: Edelweiss Financial Services share price cracked as much as 17 per cent in opening trade on BSE on Thursday, May 30, after the Reserve Bank of India imposed business restrictions on two Edelweiss group entities. Edelweiss Financial share price opened 17 per cent lower at ₹64 against its previous close of ₹77.45. The stock, however, pared some losses and traded 12.20 per cent down at ₹68 apiece around 9:30 am. Equity benchmark Sensex was 0.25 per cent down at 74,320 at that time.
As Mint reported earlier, RBI has ordered ECL Finance Ltd and Edelweiss Asset Reconstruction Co. Ltd (EARCL) to cease and desist from undertaking fresh activity with immediate effect.
The two firms had acted in concert “by entering into a series of structured transactions for evergreening stressed exposures of ECL, using the platform of EARCL and connected (alternative investment funds), thereby circumventing applicable regulations,” RBI said in a statement on Wednesday.
The regulator said it had also found incorrect valuations of security receipts in both ECL and Edelweiss Asset Reconstruction Co. Ltd.
Also Read: Evergreening, circumventing, no corrective action: Why RBI slapped curbs on Edelweiss firms
Meanwhile, in a late-night exchange filing on May 29, Edelweiss Financial Services said it reviewed the RBI order on Edelweiss Asset Reconstruction Company and would address its observations.
“We are dedicated to maintaining transparency and upholding the highest standards of corporate governance and committed to compliance with regulatory requirements. There will not be any material impact on the company’s resolution and recovery efforts, which will continue normally. We assure all our stakeholders that we are taking immediate steps to address the concerns raised by the RBI and to align our operations with regulatory expectations,” said Edelweiss Financial.
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Regarding ECL Finance Limited, in a separate exchange filing, Edelweiss Financials said the RBI order concerns the company’s wholesale exposure.
The company claimed in its exchange filing that it passed a board resolution to discontinue this business in the last financial year, which was disclosed in its financial statements for the period ending 31 March 2024. Therefore, the company believes these directions will not materially impact its strategy and business.
“The reduction of the wholesale exposure will continue as permitted, in the normal course of business. We reaffirm our commitment to complying with the RBI recommendations and hope to resolve this within three weeks, as directed by the RBI,” said Edelweiss Financial.
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As of the May 29 close, Edelweiss Financial Services shares had increased over 12 per cent in the last year. The stock hit its 52-week high of ₹87.80 on the BSE on December 20, 2023. It hit its 52-week low of ₹37.43 on June 2 last year.
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Published: 30 May 2024, 09:25 AM IST
