NEW DELHI: The Reserve Bank of India on Wednesday superseded the board of Dewan Housing Finance Corporation Ltd (DHFL) and has appointed an administrator in its place, thus clearing the deck for referring the company to the National Company Law Tribunal (NCLT).
“In exercise of the powers conferred under Section 45-IE (I) of the Reserve Bank of India Act, 1934, the Reserve Bank of India has today superseded the Board of Directors of Dewan Housing Finance Corporation Limited owing to governance concerns and defaults by DHFL in meeting various payment obligations,” RBI said, adding, it intends to shortly initiate the process of resolution of the company under the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019.
Once referred to NCLT, this would be the first housing finance firm to go for bankruptcy tribunal under the new guidelines set by the Centre, extending the insolvency law even to financial creditors, notified on November 15.
The RBI has appointed R Subramaniakumar, former MD & CEO of Indian Overseas Bank, as the administrator. The central bank said it would also apply to the NCLT for appointing the administrator as the resolution professional.
Under the new insolvency guidelines, only a regulator can refer a financial services provider to the bankruptcy tribunal and only an administrator proposed by the regulator and appointed by the tribunal can take over the management of the company.
The RBI move wasn’t quite unexpected, though.
“This move was anticipated. Now proceedings can begin. Both the RBI and the government had been proactive in taking measures,” said a senior official from the SBI, which has the largest exposure of over Rs 9,000 crore through term loans to DHFL and has been already seeking the IBC route.
SEBI chairman Ajay Tyagi has also said that mutual funds will join the resolution process of DHFL under the insolvency law framework.