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Finance Corp – Shanmugam IAS Academy
Finance Corp

DEWAN HOUSING FINANCE CORP. LTD (DHFL)

Key data’s:

  • DHFL becomes first financial services firm to be taken to NCLT
  • Under the new powers granted to RBI in the Union budget, it can take over administration of privately-held financial services companies. It can also remove auditors, call for an audit of any group cDHFL had public deposits of ₹6,188 crore as on 6 July, down from ₹10,166.72 crore as on 31 March 2018.ompany, and have a say on the compensation of the top management of an NBFC.
  • As of 6 July 2019, DHFL had a total debt of about Rs1 lakh crore in which banks have an exposure of Rs38,342 crore.
  • DHFL had stopped paying all creditors after the Bombay High Court order on 10th October put a stay on payments. The company had earlier stopped accepting public deposits and renewals of existing deposits and pre-mature withdrawals of existing deposits on 21st May.
  • DHFL has been facing a liquidity crisis since September 2018 and has so far paid Rs 41,000 crore of its financial obligations through a securitisation of assets and repayment collections.
  • With the Reserve Bank of India (RBI) taking Dewan Housing Finance Corporation Ltd (DHFL) to the National Company Law Tribunal, banks that are saddled with huge non-performing assets (NPAs) are hoping to complete the resolution within the current financial year — by March 2020.
  • DHFL’s total liabilities are Rs 83,873 crore, as per its draft resolution plan. Of this, it owes banks Rs 27,527 crore, NCD holders (including retail investors, mutual funds and others) Rs 41,431 crore, NHB Rs 2,350 crore and ECBs Rs 2,747 crore. The exposure of banks could be about Rs 38,000 crore.
  • The RBI after superseding DHFL’s board sent the mortgage lender to the NCLT for debt resolution
  • DHFL defaulted on its payment obligations in respect of bank borrowings and market borrowings, which reveals serious concerns about the conduct of the affairs of the company, the RBI said.
  • This could also be a used as a tool for RBI to ensure timely resolution for large NBFCs with significant public investments.

 

Links to note:

https://www.iasipstnpsc.in/finance-act/

https://www.moneylife.in/article/mca-orders-sfio-investigation-of-dhfl-5-other-companies/58771.html

https://indianexpress.com/article/business/banking-and-finance/banks-for-speeding-up-dhfl-debt-recovery-6143418/


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