Banking regulator, the Reserve Bank of India has set up a three-member panel to assist the recently appointed administrator of the embattled shadow bank -- Dewan Housing Finance Ltd (DHFL).
The Reserve Bank has decided to take the financial institution to the insolvency board as it continued defaulting on debt multiple times, along with concerns over governance. As a result, the central bank had superseded the DHFL board, with the appointment of administrator -- R Subramaniakumar.
The central bank has now appointed three more people, who will act as advisors to administrators.
"The Reserve Bank, in the exercise of powers conferred under section 45 IE 5(a) of the RBI Act 1934, has today constituted a three-member Advisory Committee to assist the Administrator of DHFL in the discharge of his duties," RBI said in a statement.
The administrators include Rajiv Lall, Non-Executive Chairman, IDFC First Bank; N S Kannan, Managing Director and CEO, ICICI Prudential Life Insurance and NS Venkatesh, Chief Executive, Association of Mutual Funds in India.
The books of DHFL have a whopping debt of Rs 84,000 crore, of which 88% is secured with collateral. However, banking sources suggest that this may not be sufficient, as the underlying securities won't be fetching the exact value, given the market conditions.
Lenders are already working at a new plan for resolution after the IBC proceedings against DHFL are admitted to the NCLT. Under this, banks might convert a part of their loans to equity. Lenders also plan to get private equity investors for fresh capital.
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