In a first, RBI sends DHFL to NCLT for debt resolution
01/12/2019
Mumbai: The Reserve Bank sent the troubled mortgage lender Dewan Housing Finance (DHFL) for bankruptcy proceedings, making it the first financial services player to go NCLT for a possible debt resolution.
Last week, the central bank had superseded the board of the third largest pureplay mortgage lender on concerns over its corporate governance and defaults, and appointed an administrator. “The Reserve Bank today (Friday) filed an application for initiation of corporate insolvency resolution process (with the NCLT Mumbai) against DHFL under Section 227 of the insolvency and bankruptcy code,” the RBI said in a statement. Following this the regulator also announced an interim moratorium on all repayment claims on the company till the bankruptcy application is admitted or rejected. With this the city-headquartered housing finance company, the third largest among mortgage players, is the first NBFC/HFC to go for bankruptcy resolution after the government had on November 15, notified Section 227 of IBC to deal with systemically important financial service providers with over Rs 500 crore assets, excluding banks for bankruptcy and empowered the RBI to do so. Following this, on November 20, the RBI superseded the board and appointed a former head of Indian Overseas Bank R Subramaniakumar as its administrator. On November 22, the central bank constituted a three- member advisory committee, comprising IDFC First Bank non- executive chairman Rajiv Lall; ICICI Prudential Life Insurance managing director NS Kannan and mutual funds body Amfi chief executive NS Venkatesh.
The committee will assist Subramaniakumar in the operations of DHFL during the insolvency resolution process.
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