RBI supersedes DHFL board; may soon refer mortgage lender for insolvency proceedings

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The board of Dewan Housing Finance (DHFL) has been superseded by the Reserve Bank of India (RBI) on governance-related concerns and payment defaults. "The Reserve Bank has today superseded the Board of Directors of Dewan Housing Finance Corporation (DHFL) owing to governance concerns and defaults by DHFL in meeting various payment obligations," RBI said in a statement on Wednesday. R Subramaniakumar, ex-MD and CEO of Indian Overseas Bank, has been appointed as the administrator of the financially-troubled mortgage lender, the RBI also said. The troubled company will shortly be referred for insolvency proceedings, RBI also said.

The announcement comes after the government last week empowered the RBI to refer stressed NBFCs and HFCs having assets worth of at least Rs 500 crore to insolvency court."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," it added.

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Meanwhile, a few days back, the Bombay High Court allowed troubled mortgage lender to make payments to banks and NBFCs, which have securitisation arrangements with it. Seven lenders, led by State Bank of India (SBI), had filed an intervention plea seeking vacation from an earlier order. Other petitioners included Union Bank of India, HDFC Bank, and Indian Overseas Bank The Bombay HC had earlier restrained DHFL from making payments to any of its secured/unsecured creditors, including the payments to any fixed deposit holders, on October 10, following a petition filed by mutual funds. Justice AK Menon said in his order: