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NEW DELHI : The Reserve Bank of India (RBI) as the regulator of non-bank lenders and the Securities and Exchange Board of India (Sebi) as the watchdog of listed companies will take the lead in probing the allegations of corporate governance lapses in PTC India Financial Services Ltd (PFS), while the government will closely monitor the situation and wait for an assessment of the affairs of the company, a government official said.

The charges mainly relate to the appointment of a chief financial officer and alleged changes in loan terms in an account. The extent of damage because of any alleged governance lapse has to be assessed before any strong action is taken, the person said. “Assessing the damage, if any, is a priority. Also, it needs to be assessed whether the allegations are a matter of difference of opinion within the board or of a material lapse in governance," the person said.

RBI is the frontline regulator for non-bank lenders, including for any action such as appointing an administrator replacing the board after a 2019 rule change under the bankruptcy code. In the case of non-bank lender Infrastructure Leasing & Financial Services Ltd (IL&FS), which defaulted on payment obligations in 2018, the government had approached the National Company Law Tribunal (NCLT) for replacing the board in the absence of a specific mandate to RBI for it then.

The ministry of corporate affairs is an umbrella organization for all listed and unlisted companies, but sectoral regulators oversee additional regulatory requirements specified by them. If any inspection of books by the registrar of companies is warranted, the director general of company affairs will look into that, the person said, requesting anonymity. All non-banking financial companies are registered as companies and most of them, barring housing finance companies, merchant banks, venture capital fund companies, and a few others, require RBI registration too.

RBI and Sebi will assess if the charges go beyond mere differences in opinion. Cases of governance lapses, including those raised by disputing shareholders, based purely on differences in opinion have not survived, the person quoted above said.

A spokesperson for PFS said, “The company is in regular touch with Sebi on the aforesaid issues. The queries as received are being responded to accordingly." There was no official response to a request for comment from the ministries of corporate affairs or finance.

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