Edelweiss Financial’s Stock Plummets 17% Following RBI’s Action on ECL and EARCL

The share price of Edelweiss Financial Services took a sharp nosedive on Thursday, May 30, plummeting by as much as 17% in opening trade on the Bombay Stock Exchange (BSE). This drastic drop came in the wake of the Reserve Bank of India (RBI) imposing business restrictions on two entities within the Edelweiss group.

Specifically, the RBI ordered ECL Finance Ltd and Edelweiss Asset Reconstruction Co. Ltd (EARCL) to cease and desist from undertaking any fresh activities immediately. The central bank highlighted that these two firms had engaged in structured transactions to evade regulations and manipulate valuations of security receipts.

In response to the RBI’s directive, Edelweiss Financial Services issued a statement affirming their commitment to transparency, corporate governance, and regulatory compliance. The company assured stakeholders that their resolution and recovery efforts would continue unaffected, despite the regulatory constraints.

Furthermore, Edelweiss Financials clarified that the RBI’s order primarily pertained to the wholesale exposure of ECL Finance Limited, a segment that the company had already decided to discontinue in the previous financial year. They expressed confidence that the directions from the RBI would not significantly impact their business strategy.

As of the previous day’s close, Edelweiss Financial Services shares had witnessed a 12% increase over the past year. However, the recent regulatory intervention has cast a shadow over the company’s stock performance, prompting investors and analysts to closely monitor the unfolding situation.