RBI supersedes DHFL board, to initiate insolvency proceedings

The Reserve Bank of India (RBI) on Wednesday superseded the board of beleaguered Dewan Housing Finance Corporation Limited (DHFL) as it "intends to shortly" initiate the process of insolvency.

"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of the powers conferred under Section 45-IE (I) of the Reserve Bank of India Act, 1934, the Reserve Bank has today superseded the Board of Directors of Dewan Housing Finance Corporation Limited (DHFL) owing to governance concerns and defaults by DHFL in meeting various payment obligations," said the RBI in a statement.

"R Subramaniakumar, ex-MD and CEO of Indian Overseas Bank, has been appointed as the Administrator under Section 45-IE (2) of the Act. 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," adds the RBI statement.

In January, a web portal accused the DHFL promoters of committing financial frauds by creating shell companies. A total of 32 Indian and foreign banks lent Rs 97,000 crore to DHFL Group companies with many borrower companies having the same addresses, directors, and auditors, the news portal had alleged.

DHFL is the fourth-largest Indian housing finance company based on loans outstanding as of March. It has been facing a liquidity crisis since September 2018 but has paid over Rs 41,000 crore towards discharging its financial obligations.