Having burnt their fingers in the Essar Steel insolvency case, lenders are looking for a speedier and time-bound resolution for Dewan Housing Finance Corp Ltd (DHFL) in the bankruptcy tribunal.
Stuck in the tribunal since August 2017, the Essar Steel insolvency case was finally resolved by the Supreme Court last month.
DHFL is the first company to be referred to the National Company Law Tribunal (NCLT) after the government notified new rules for such proceedings against financial services providers (FSPs) on 15 November. For these companies, only the regulator is allowed to approach the tribunal seeking resolution under the Insolvency and Bankruptcy Code (IBC).
The Economic Times reported on Wednesday that lenders have met Reserve Bank of India (RBI) and proposed a four-month programme to resolve the DHFL case. The company was referred to NCLT by RBI on 29 November. The central bank’s initiative sought to secure the interests of all creditors, including over 100,000 fixed deposit holders of DHFL, as a delay in resolution can lead to a rise in slippages and higher non-performing assets. Prior to this, lenders were working on a resolution plan, where they would pick up 51% stake in DHFL by converting a part of their debt into equity.
The mortgage lender’s total debt stood at ₹83,873 crore, of which ₹38,342 crore is owed to banks, as on 6 July. That apart, lenders have also purchased securitised loan pools of ₹37,633 crore. DHFL had public deposits of ₹6,188 crore as on 6 July, down from ₹10,166.72 crore as on 31 March 2018.
Meanwhile, a two-judge NCLT bench on Monday admitted DHFL under the IBC and approved the appointment of R Subramaniakumar, former chief executive of Indian Overseas Bank (IOB) as the as the administrator.
The tribunal also gave some hope to the depositors of the mortgage lender.
“The Administrator shall update the list of depositors along with the outstanding amount payable to each one with their address and communication information so that in future their interest can be watched along with all other stakeholders," it said.