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finance | IST

NCLT admits RBI plea seeking bankruptcy proceedings against DHFL

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The Mumbai bench of National Company Law Tribunal admitted the Reserve Bank of India’s plea seeking to initiate insolvency and bankruptcy proceedings against troubled financier, Dewan Housing Finance Limited on Monday. While the details of the order are yet to be released, the court said there was merit in initiating bankruptcy proceedings against the housing finance company on the basis of RBI’s petition.

The Mumbai bench of National Company Law Tribunal admitted the Reserve Bank of India’s plea seeking to initiate insolvency and bankruptcy proceedings against troubled financier, Dewan Housing Finance Limited on Monday. While the details of the order are yet to be released, the court said there was merit in initiating bankruptcy proceedings against the housing finance company on the basis of RBI’s petition.
The petition was filed by the Reserve Bank of India on November 29 under the newly carved out Section 227 of the Insolvency and Bankruptcy Code 2019 rules for Financial Service Providers.
The counsel for Reserve Bank of India informed the court that the plea had been filed by the regulator on the basis of a confirmation of a default by DHFL in interest repayment to the tune of USD 2.16 million to State Bank of India, which has lent over USD 240 million to the company via the ECB route through its Singapore branch.
Dewan Housing Finance Ltd has liabilities of approximately Rs 92,715 crores due as of September 2019, the RBI counsel stated.
CNBC-TV18 was the first to report that the Reserve Bank of India had superseded the board of DHFL on November 20 due to governance concerns and defaults in repayment to lenders, and appointed the former MD & CEO of Indian Overseas Bank, R Subramaniakumar, as the Administrator of the company. Thereafter, RBI also appointed a panel of three advisors to the administrator, including Rajiv Lall, NS Kannan, and NS Venkatesh. While Lall serves as the non-executive chairman in IDFC First Bank, Kannan is managing director and chief executive officer of ICICI Prudential Life Insurance, and Venkatesh is the chief executive of the Association of Mutual Funds in India.