The Reserve Bank of India (RBI) has given approval to the Dewan Housing Finance Corporation(DHFL) resolution plan from Piramal Capital and Housing Finance (PCHFL), a company of Piramal group. Committee of Creditors(CoC) has approved the resolution plan in its 18th meeting ended on January 15, 2021. The resolution plan will revive the debt-ridden DHFL.
i.This approval paves way for Piramal group to acquire DHFL.
ii.After RBI’s Approval, Piramal Group has to seek approval from The National Company Law Tribunal (NCLT) to acquire DHFL.
Note: The total debt of DHFL is around Rs 89,000 crore.
About the Resolution Plan:
As per the plan, Piramal group will merge PCHFL with DHFL, which involves a total payment of around Rs 35,000 crores.
It is expected that the merged entity will focus largely on the retail real estate and lending space.
Key Info:
i.RBI, in 2019 referred DHFL to NCLT for insolvency proceedings.
ii.It is to be noted that DHFL was the 1st finance company to be referred to NCLT by the RBI using special powers under Section 227 of the Insolvency and Bankruptcy Code(IBC), 2016.
About Dewan Housing Finance Corporation(DHFL):
i.RBI in November 2019, superseded the Board of Directors of the corporation under Section 45 IE of the Reserve Bank of India Act, 1934.
ii.RBI also appointed Shri R. Subramania Kumar as its Administrator with effect from 20th November, 2019.
iii.In addition to this, RBI also constituted a 3-member committee under Section 45 IE of the Reserve Bank of India Act, 1934, to act as advisors to the Administrator.
Members of Committee:
- Rajiv Lall, Non-Executive Chairman, IDFC First Bank Limited;
- Shri N S Kannan, Managing Director and Chief Executive Officer, ICICI-Prudential Life Insurance Co. Limited
- Shri NS Venkatesh, Chief Executive, Association of Mutual Funds of India
Head Office– Mumbai, Maharashtra
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About Piramal Group:
Chairman– Ajay Piramal
Head Office– Mumbai, Maharashtra
