Search
+

    NCLT admits RBI plea seeking bankruptcy resolution for DHFL

    Synopsis

    The move came in after the Reserve Bank last Friday made an application for bankruptcy proceedings to resolve the credit and liquidity crisis at the company, which became the first financial sector player being sent for bankruptcy. dmitting the petition, an NCLT bench said the petition deserves admission."

    MUMBAI: The Mumbai bench of the National Company Law Tribunal on Monday admitted an RBI petition seeking bankruptcy proceedings to resolve the mortgage player Dewan Housing Finance (DHFL).

    The move came in after the Reserve Bank last Friday made an application for bankruptcy proceedings to resolve the credit and liquidity crisis at the company, which became the first financial sector player being sent for bankruptcy.

    Admitting the petition, an NCLT bench said, "the petition deserves admission."

    The third largest pure-play mortgage player has been in liquidity crisis for long and on November 20 the RBI had superseded its board and placed under an administrator.

    Following this, the RBI had last Friday issued a statement that it would be sent to NCLT for debt resolution.
    (Catch all the Business News, Breaking News Events and Latest News Updates on The Economic Times.)

    Also Read

    16 Comments on this Story

    Hudaf Shaikh255 days ago
    RBI has stated the reason for superseding the board of DHFL as a default of $2 million on a ECB borrowing reported by SBI - sadly, it seems RBI is only concerned with protecting the interest of FII investors. There are also concerns re: the motives of RBI appointed administrator, R Subramaniakumar - who after asking Mumbai High Court for some time to respond to an application by FD holders, failed to show up on the revised date - hopefully, the CoC when formed, will replace him with a person of high integrity.
    That said, NCLT has asked for collation of names / addresses of Fixed Deposit holders - so, that is a positive.
    Kuldeep Ashok255 days ago
    NCLT has to resolve the case of Public FD depositors and decide on the amount and time frame for repayment. Earlier before bankruptcy repayment was governed by rules of the National Housing Bank which is in turn administered by RBI. Strictly speaking as per the law FD holders are considered unsecured but in case of NBFCs bankruptcy was not allowed earlier, DHFL is the first one to face bankruptcy that is why it is a test case and a challenge for NCLT. While changing laws to bring NBFC in bankruptcy court Government forgot to upgrade the status of Public Depositor from unsecured to secured. I hope NCLT will keep this in mind and keeping in mind that it is going to decide the fate of over One Lakh FD holders who have invested their life's savings in DHFL. Also NCLT can also refer to the Hardships clause of RBI and allow immediate payment to the FD holders.
    .
    Hitesh Kumar255 days ago
    Any steps taken by RBI should and must include full payment of fixed deposits from normal man other wise RBI has no business meddling in affairs of private companies as it defeats very purpose of financial cleansing. Dhfl definitely had the system in place to perform. Shock treatment is sending shock waves in retail investors which will lead to collapse of our financial system.
    The Economic Times