Recorded RBI impact
Board supersession
Board supersession · Fresh imposition
Published by RBI
20 Nov 2019
Case Brief
The Reserve Bank of India, exercising powers under Section 45-IE(1) of the RBI Act, 1934, superseded the Board of Directors of Dewan Housing Finance Corporation Limited (DHFL). The action was taken because of governance concerns and DHFL’s defaults in meeting various payment obligations. Shri R. Subramaniakumar, ex-MD and CEO of Indian Overseas Bank, was appointed as Administrator under Section 45-IE(2). RBI also stated that it intended to initiate the resolution process for the company under the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 and to apply to the NCLT for appointing the Administrator as the Insolvency Resolution Professional.
Why RBI Acted
Invoking Section 45-IE(1) of the RBI Act, 1934, the Reserve Bank superseded the Board of Directors of Dewan Housing Finance Corporation Limited (DHFL). The stated grounds were governance concerns and DHFL’s defaults in meeting various payment obligations. RBI also appointed Shri R. Subramaniakumar as Administrator under Section 45-IE(2) and indicated it would initiate resolution proceedings under the Insolvency and Bankruptcy Rules, 2019.
Operating Impact
DHFL’s board stands removed and management control shifts to the appointed Administrator. The company is expected to move into resolution proceedings under the insolvency framework, which may affect creditors, borrowers, and other counterparties; no penalty amount was imposed in this release.
Regulatory Basis
- Section 45-IE (I) of the Reserve Bank of India Act, 1934
- Section 45-IE (2) of the Act
Action Facts
- Primary Impact
- Board supersession
- Order Date
- 20 Nov 2019
- Effective From
- 20 Nov 2019
- Entities Affected
- 1
- Entity Role
- Bulk Member
- Entity Type
- NBFC
Related Entities
Entities similar to DHFL