DHFL crisis: Public depositors risk losing large part of their Rs 6,000 crore deposit
New Delhi: Public depositors, who have deposited nearly Rs 6,000 crore with Dewan Housing Finance (DHFL), are on the verge of losing most of their hard-earned money after the Reserve Bank of India suspended the board of the stressed lender.
DHFL is the first NBFC likely to be taken to a bankruptcy tribunal. As DHFL is required to pay a large number of fixed-deposit holders, it is to be seen how the resolution is undertaken.
Out of DHFL’s total debt of Rs 83,900 crore, 7% is contributed by public depositors, while 37% is contributed by debenture holders and 31% by banks through term loans.
“The need is to insulate its contagion effect and reinforce confidence of stakeholders in the ecosystem,” a leading business daily quoted Hari Hara Mishra, a former executive at a nationalised bank as saying.
Worth mentioning here is that under IBC, secured creditors and workmen are to be paid fully first during the liquidation process and after that unsecured financial creditors and operational creditors are paid. Fixed depositors fall under the unsecured creditors’ category in the claims pecking order.
Both debenture holders and banks will have the first charge on claims as they fall under secured creditors. Unsecured creditors will have the second charge. As per the publication, depositors may want representation on the Committee of Creditors (CoC), as it happened in the case of Jaypee Infra resolution, where the Supreme Court had treated homeowners on a par with financial creditors.
RBI superseded DHFL’s board on Wednesday and it wants to refer DHFL to the National Company Law Tribunal under IBC. An administrator has been appointed, and he will take stock of DHFL’s assets and liabilities.
A resolution plan will be accepted only if 66% of the CoC, agree to a proposal. Lenders to DHFL include banks, debenture holders and investors in its external commercial borrowing instruments. There is already a freeze on payments to creditor.
“With RBI filing the application to NCLT, an interim moratorium will also kick in, which will restrict all payments even to deposit holders,” the publication quoted Sudip Mahapatra, partner SNR Associates as saying. “Deposit holders can go to Supreme Court, and the SC could provide some relief to deposit holders.”
DHFL had stopped paying all creditors after the Bombay High Court passed an order on October 10, putting a stay on payments. The original order was modified to allow payments in securitisation deals.
On May 21, DHFL had stopped accepting public deposits, renewing existing deposits, and allowing premature withdrawals.
