RBI Cancels Registration of Margdarshak Financial Services Over High NPAs

The Reserve Bank of India has revoked the registration of Margdarshak Financial Services Ltd due to high net Non-Performing Assets (NPAs) and defaults on lender repayments. The company failed to meet regulatory requirements, including maintaining a minimum net owned fund and capital adequacy ratio. Additionally, Margdarshak faced cash flow issues and significant delays in finalizing its balance sheet.

The Reserve Bank of India (RBI) has canceled the registration of Lucknow-headquartered Margdarshak Financial Services Ltd due to high net Non-Performing Assets (NPAs) and lender repayment defaults.

As of March 31, 2021, the company failed to maintain the regulatory minimum net owned fund of Rs 5 crore and a capital adequacy ratio of 15%, stipulated for NBFC-MFIs, according to the RBI.

The statutory audit revealed on March 31, 2021, that the NBFC had cash flow issues and defaulted on Rs 49.27 crore of lender repayments. The audit pointed out material uncertainty due to Rs 187 crore in losses and Rs 82.37 crore in net NPAs, questioning the company's ability to continue as a going concern.

Additionally, there was a significant delay in finalizing the balance sheet for the year ending March 31, 2021, which was completed seven months later, on October 22, 2021. Regular delays in supervisory return submissions were also noted. The company failed to provide required information during an on-site inspection, refusing to show books of accounts and other documents.

Meanwhile, the RBI imposed penalties on NDX P2P Pvt Ltd and Innofin Solutions Pvt Ltd for non-compliance with rules for 'peer-to-peer lending platforms' and digital lending guidelines. A penalty of Rs 1.99 crore was placed on Innofin Solutions Pvt Ltd, also known as 'LenDen Club,' and Rs 1.92 crore on NDX P2P Pvt Ltd, known as 'LiquiLoans.'

(With inputs from agencies.)