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A section of lenders to Srei group has proposed to split the cash flows of Srei Infrastructure Finance Ltd and its unit Srei Equipment Finance Ltd through two separate escrow accounts to ensure dues are paid promptly, two people directly aware of the development said.

This comes after bankers to the Kolkata-based non-banking financial companies (NBFCs) met on 28 November to decide on the way forward after Srei group merged the lending business of parent Srei Infrastructure with Srei Equipment in October last year, which most of the lenders to the two companies claim was done without their approval.

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Lenders alleged the group consolidated its lending business into Srei Equipment with the consent of only lead lenders UCO Bank and Axis Bank. “Other banks were informed only in February that the consolidation had come into force from October 2019," said one of the two people cited above, both of whom spoke on condition of anonymity. The person said lenders are monitoring cash flows of both firms and have informed them about their decision to keep the cash flows of the two companies separate.

“Lenders told Srei they do not appreciate the fact that it moved NCLT seeking approval for transfer of assets when it has not cleared the plan," the person said.

The second person said that at the November meeting lenders decided to challenge the Kolkata NCLT order in the National Company Law Appellate Tribunal. The Kolkata bench of NCLT had on 21 October initiated the process of asset transfer and scheduled creditor meetings this month. “The order set the meeting of creditors for 16 and 23 December in Kolkata to vote on the proposal and considering we are appealing the order, the dates may be postponed," said the second person, adding that some lenders are also at fault.

An email sent to Srei remained unanswered till press time.


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