Indian central bank Reserve Bank of India has formally approved the takeover of DHFL by Piramal Group on 18th February 2021.
Points To Note
- The decision was taken by central bank after a month a Committee of Creditors of DHFL voted in favor of Piramal’s bid.
- The bid got the 94% votes.
- Following this, the resolution plan of the company has been approved by the central bank.
- Now, the Piramal Group will require to take permission of National Company Law Tribunal to take over the DHFL (Dewan Housing Finance Corporation).
- Apart from the Piramal Group, another major contender for the debt-ridden NBFC was USA-based Oaktree Capital Management.
- The Oaktree Capital Management had secured 45% of votes from the lenders.
- Piramal Group has offered Rs 37,250 crore while the Oaktree Capital has offered Rs 38,400 crore offered by Oaktree Capital.
- But, the Piramal group had offered high upfront cash payment. Thus, the company has won the bid.
The Dewan Housing Finance Corporation is a deposit-taking housing finance company. The companie’s headquarter located in Mumbai, Maharashtra. DHFL was established in order to enable the access to the economical housing finance for the lower- and middle-income groups in the semi-urban and rural India. DHFL is the second India’s housing finance company.
- The Dewan Housing Finance Corporation had stopped payment of bonds in 2019 and it also defaulted on its loan obligations. Reason being this, the stock of the company fell over 97 per cent. Thus, the central government intervene in the company.
- Following this, a resolution plan was made. In order to restructure the debt into equity in the company, some of the bond holders moved to the debt recovery tribunal. But the company offered to repay all investors in full through an inter-creditor-agreement.
- But, in the year 2019 itself, Enforcement Directorate (ED) conducted raided the company and found links of money laundering activity with respect to the loans given to closely linked firms.
- Following this, in accordance with the RBI Act of 1934, RBI removed the board of directors DHFL alleging inadequate governance in the company.
- Now this company stands bankrupt.
Piramal group to takeover the DHFL Ltd Piramal group to takeover the DHFL Ltd