The Reserve Bank of India (RBI) has decided to lift the business restrictions on two companies from the Edelweiss Group, ECL Finance and Edelweiss Asset Reconstruction Company (ARC). The RBI made this decision after being convinced that these companies took the right steps to fix the issues raised by the bank.
Earlier, on May 29, the RBI had put restrictions on these companies because they were found to be involved in serious problems related to how they managed bad loans, a practice known as ‘evergreening.’ This meant they were trying to cover up bad loans by pushing them into new loans, which isn’t allowed.
Because of this, ECL Finance was told to stop doing complex financial deals, except for paying back or closing accounts. At the same time, Edelweiss ARC was prohibited from buying new financial assets or reorganizing old ones into different categories.
However, now that the RBI believes ECL Finance and Edelweiss ARC have made the necessary improvements, it has lifted the restrictions immediately.
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