Reserve Bank of India takes over DHFL, surprises banks

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Reserve Bank of India takes over DHFL, surprises banks
Reserve Bank of India takes over DHFL, surprises banks

New Delhi : The Reserve Bank of India on Friday surprised lenders of Dewan Housing Finance Corp. Ltd (DHFL) by superseding its board, four bankers aware of the development told LiveMint.

These bankers had gone to the RBI with a resolution plan to overcome the crisis situation.

The Central Bank has also appointed an administrator who will look after the operations of the lender under its new acquired power. The RBI was worried that a delay in the process can lead to further deterioration of DHFL’s assets and hurt a planned bankruptcy resolution, the people cited above said on condition of anonymity.

“Most of DHFL lender banks were huddled in a meeting on Wednesday at SBI Capital Markets’ office in Cuffe Parade in South Mumbai since afternoon," said one of the four bankers cited above.

“The lenders were discussing the next course of action leading to DHFL’s referral to insolvency by RBI when the statement came," this person said.

While the details from the meeting between DHFL executives and RBI officials are not known, it bankers cited serious concerns over the Fixed Deposits of over 1,00,000 accounts which are yet to be paid despite their maturity period has already expired.

“Under the previous plan, a staggering 10-year payout to public depositors with zero interest was proposed. The new plan, however, proposes that they are paid when deposits mature, in line with what the company said at the Bombay high court," said one of these people.