Post-Reserve Bank of India's decision to supersede the boards of the Srei Equipment Finance, citing concerns over governance and payment defaults, the shares of the company tanked on the bour.

The stock tanked 5 per cent to Rs 8.17 -- its lower circuit limit -- on BSE.

On NSE, it tumbled 4.65 per cent to Rs 8.20, its lower circuit limit.

The Reserve Bank on Monday superseded the boards of Srei Infrastructure Finance as well as Srei Equipment Finance, citing concerns over governance and payment defaults, and decided to refer the two NBFCs for resolution under the insolvency law.

This is only the second time in as many years that the Reserve Bank of India (RBI) is referring entities for the resolution process under the Insolvency and Bankruptcy Code (IBC) after taking first ever such step in the case of DHFL back in 2019.

Superseding the boards of the crisis-hit Srei Infrastructure Finance Limited (SIFL) and Srei Equipment Finance Limited.

(SEFL), the RBI has appointed Rajneesh Sharma, former Chief General Manager of Bank of Baroda as the administrator to manage the affairs of the two companies.

A Srei group spokesperson said SIFL was "shocked" by the RBI''s move as banks have been regularly appropriating funds from the escrow account they have controlled since November 2020, and added that necessary steps as advised by its lawyers will be taken.

In a statement, the RBI said it has "superseded the Board of Directors of Srei Infrastructure Finance Limited (SIFL) and Srei Equipment Finance Limited (SEFL), owing to governance concerns and defaults by the... companies in meeting their various payment obligations".

(With inputs from PTI)