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Reserve Bank files insolvency plea against Dewan Housing

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First instance of IBC applied against a financial services firm

The Reserve Bank of India (RBI) has filed an insolvency application against troubled mortgage lender Dewan Housing Finance Corporation Ltd. (DHFL) at the Mumbai bench of the National Company Law Tribunal.

This will be the first instance of bankruptcy proceedings against a financial services company, after the government issued a notification earlier this month specifying the categories of financial service providers that can be taken up for resolution under the generic framework of the Insolvency and Bankruptcy Code.

“The Reserve Bank today filed an application for initiation of corporate insolvency resolution process against Dewan Housing Finance Corporation Limited under Section 227 read with clause (zk) of sub-section (2) of Section 239 of the Insolvency and Bankruptcy Code (IBC), 2016 read with Rules 5 and 6 of the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudication Authority) Rules, 2019,” the RBI said.

According to the rules, an interim moratorium will start from the date of filing of the application till its admission or rejection.

Earlier, RBI had superseded the board of DHFL and said bankruptcy proceedings would be initiated against the company.

R. Subramaniakumar, former MD and CEO of Indian Overseas Bank, was appointed as the administrator and a three-member committee was formed to assist him.

The mortgage lender, which has been facing a cash crunch over the past one year after banks choked lending, has an overall debt of more than ₹80,000 crore. Banks have an exposure of close to ₹40,000 crore to the company.

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Printable version | Jan 21, 2020 10:40:27 AM | https://www.thehindu.com/business/reserve-bank-files-insolvency-plea-against-dewan-housing/article30118467.ece

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