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Mutual funds will join DHFL's IBC resolution process: Sebi chief Tyagi

Mutual funds, which have lent substantial sums of money to DHFL had not joined previous attempts at resolution, after financial woes at the company came to light

Press Trust of India  |  Mumbai 

Ajay Tyagi, Sebi Chief. Photo: Kamlesh Pednekar
Ajay Tyagi, Sebi Chief. Photo: Kamlesh Pednekar

Chairman on Wednesday said will join the resolution process of to be done under the insolvency law framework.

Amid the crisis at DHFL, once a leading player in the housing finance space, the Reserve Bank of India (RBI) on Wednesday superseded the board of the company.

Mutual funds, which have lent substantial sums of money to had not joined previous attempts at resolution, after financial woes at the company came to light.

"Under the IBC, are also considered as lenders and they will follow that rule. We have nothing to say on that," Chairman told reporters here, without naming

Resolution of financial service providers can now be taken up under the (IBC), with the government notifying a generic framework for such cases.

Tyagi said that a distinction has to be made between ICA (Inter-Creditor Agreement) and IBC, while making it clear that would join the process under the Code.

ICA was primarily for entities regulated by the central bank and akin to an "out of court settlement" before an asset goes to the National Company Law Tribunal (NCLT), he added.

According to him, had given mutual funds the choice on whether to join ICA or not and made it clear that if they join, it should be limited to clearing the stock of toxic assets.

"While doing so, Sebi had made it clear that mutual funds are different in structure as compared to banks," he noted.

RBI has appointed R Subramaniakumar, ex-managing director of Indian Overseas Bank, as administrator of DHFL, which is estimated to have debt worth over Rs 1 lakh crore.

First Published: Wed, November 20 2019. 19:50 IST
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