RBI Rejects Ex-Cop Asthana’s Appointment to Religare Board; Company Calls Delay an “Oversight”

Religare Enterprises (REL) revealed on Thursday that the Reserve Bank of India (RBI) had rejected its proposal to appoint former senior police officer Rakesh Asthana as a director on its board. The company’s exchange filing came after a five-month delay.

Earlier this month, The Economic Times reported, citing sources, that the RBI had declined Asthana’s appointment.

Religare admitted that not disclosing this information sooner, as required by listing rules, was an “oversight.”

According to Religare, the central bank rejected Asthana’s appointment on May 15, 2024. However, the company only received the official rejection letter on May 22, 2024.

Asthana, a former Indian Police Service officer, had been appointed as an additional director by the Religare board on November 2, 2023, with the role of whole-time director, pending shareholder and regulatory approvals, including from the RBI.

Religare stated it submitted the required documents to the RBI on November 17, 2023. However, the company was surprised when the RBI refused to approve Asthana’s appointment without providing any explanation. Religare said that Asthana’s credentials should have been enough for reconsideration.

In March 2024, after the three-month period for securing shareholder approval had passed, the Burman family, who own 26% of Religare, raised concerns with the Securities and Exchange Board of India (SEBI), arguing that Asthana’s appointment was unlawful.

The Burmans claimed Religare had not followed the proper process by failing to get shareholder approval within three months or during the next annual general meeting (AGM), as required by SEBI regulations.

The family urged SEBI to ensure that Religare includes Asthana’s appointment on the next AGM agenda and, if the rules weren’t followed, to cancel the appointment altogether.

Since Asthana’s appointment was made during an open offer, Religare would need at least 75% shareholder approval, which seems unlikely due to the Burmans’ 26% stake.

In August, Religare postponed its AGM from September 2024 to December 2024, a decision the Burmans have legally challenged. The Delhi High Court will hear the Burmans’ case in November regarding the delay.