The Reserve Bank of India (RBI) has lifted the business restrictions on two Edelweiss Group entities, ECL Finance  and Edelweiss Asset Reconstruction Company.

After review, the RBI was satisfied that both these entities have taken the necessary remedial actions and committed to comply with regulatory guidelines on an ongoing basis.

The restrictions were imposed on 29 May this year due to regulatory concerns. The RBI had then said that the two group entities had acted in concert “by entering into a series of structured transactions for evergreening stressed exposures of ECL, using the platform of EARCL and connected AIFs (alternative investment funds), thereby circumventing applicable regulations". During the course of supervisory examinations, the regulator also found incorrect valuations of security receipts in both ECL and EARCL.

ECL Finance was directed to cease and desist from undertaking any structured transactions in respect of its wholesale exposures, except for repayment or closure of accounts in its normal course of business.

In the case of Edelweiss ARC, the asset reconstruction company was barred from acquiring financial assets, including security receipts (SRs) and reorganising the existing SRs into senior and subordinate tranches.

"The companies engaged with the Reserve Bank on the remedial measures to address the supervisory concerns," the central bank said in a statement.

The restrictions were imposed under the Reserve Bank of India Act, 1934, and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI).