Within days of the government empowering it to refer stressed shadow banks to insolvency courts, the Reserve Bank of India (RBI) on Wednesday placed the crippled Dewan Housing Finance (DHFL) under an administrator and said the resolution process for the lender will begin shortly.
The city-headquartered pureplay mortgage lender becomes the first NBFC/HFC to go for bankruptcy resolution. The central bank superseded the board of the third the largest pure-play mortgage lender in the evening, citing governance issues and severe liquidity crisis which led to a string of defaults.
Last Friday, the government had notified Section 227 of the IBC empowering RBI to refer financial sector players like NBFCs and HFCs, but excluding banks, with assets worth of at least Rs 500 crore to insolvency courts.
"The RBI has decided to supersede the board of DHFL owing to governance concerns and defaults in meeting various payment obligations," the central bank said in the order. The RBI also appointed Indian Overseas Bank's former managing director R Subramaniakumar, as its administrator.
CNBC-TV18's Shereen Bhan and Ritu Singh are in conversation with Ajay Srivastava, chief executive officer of Dimensions Corporate Finance Services; HP Ranina, a corporate lawyer and Sandeep Parekh, founder of Finsec Law Advisors.