The Reserve Bank of India on Wednesday superseded the Board of Directors of Dewan Housing Finance Corporation Limited (DHFL) and said it intends to shortly initiate the process of resolution of the company.
RBI cited governance concerns and payment defaults by DHFL as the reasons for superseding the board. RBI’s move is set to help lenders take faster decisions regarding the company, which has debts of over Rs 80,000 crore. The RBI also appointed the R. Subramaniakumar, ex-MD and CEO of Indian Overseas Bank, as the administrator.
With this, DHFL is set to become the first non-bank lender to be referred to the National Company Law Tribunal (NCLT) under new rules notified by the government on 15 November. "In exercise of the powers conferred under Section 45-IE (I) of the Reserve Bank of India Act, 1934, the Reserve Bank has today superseded the Board of Directors of DHFL owing to governance concerns and defaults by DHFL in meeting various payment obligations," an RBI statement said.
The Reserve Bank also intends to shortly initiate the process of resolution of the company under the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 and would also apply to the NCLT for appointing the Administrator as the Insolvency Resolution Professional, the central bank said.