The Reserve Bank of India has filed a bankruptcy petition against troubled mortgage lender Dewan Housing Finance Corporation Ltd (DHFL), the regulator said in a statement today.
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This is the first instance of an insolvency proceeding against a company in the financial sector.
DHFL was facing a liquidity crisis for more than an year after banks choked lending which resulted in defaults. Banks have an exposure of ₹40,000 crore to DHFL.
As per rules, an interim moratorium will now commence from the date of filing of the application till its admission or rejection.
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Last week, the RBI formed a three-member advisory committee to assist the administrator of troubled mortgage lender DHFL.
Rajiv Lall, Non-Executive Chairman, IDFC First Bank Ltd; N.S. Kannan, Managing Director and CEO, ICICI Prudential Life Insurance Co. Ltd; and N.S. Venkatesh, Chief Executive, Association of Mutual Funds in India, were part of the advisory committee
Earlier the RBI had superceded the Board of the home financier and appointed former MD&CEO of Indian Overseas Bank, R Subramaniakumar, as the Administrator.