RBI clears Piramal Group's takeover plan for DHFL
19 February 2021
Reserve Bank of India (RBI) is reported to have cleared Piramal Capital and Housing Finance Limited’s (PCHFL) proposal to acquire bankrupt Dewan Housing Finance Limited (DHFL), as proposed by the committee of creditors (CoC).
RBI gave its go-ahead for the deal earlier this week, clearing Piramal Capital and Housing Finance under the “fit and proper” criteria required for the acquisition. However, RBI turned down a request by PCHFL, a non-deposit taking NBFC, to get converted into a deposit-taking NBFC.
RBI’s nod brings Piramal Group one step closer to the acquisition of DHFL, pending the final clearance from the National Company Law Tribunal (NCLT).
“We will file the resolution plan with NCLT for its approval soon now that RBI has cleared the plan,” added a senior executive from one of the large lenders to the company.
The resolution plan was approved by the committee of creditors on January 17, with almost 94 per cent of the lenders voting in favour of PCHFL’s plan.
Under the resolution plan, PCHFL would pay a total of Rs37,250 crore, which comprises debt instruments amounting to Rs19,550 crore with a 10-year tenure, and Rs17,700 crore as upfronhich includes the Rs3,000 crore entitled to financial creditors from the cash on DHFL’s books.
The plan also involves de-listing DHFL and then merging it with Piramal Capital & Housing Finance Limited, a wholly-owned subsidiary of Piramal Enterprises.
DHFL is the first financial services firm to come under the Insolvency and Bankruptcy Code (IBC) code.
DHFL is facing claims of Rs87,031 crore from financial creditors under NCLT. Its large lenders include State Bank of India (including SBI Singapore) with Rs10,083 crore exposure, Bank of India Rs 4,125 crore, Canara Bank Rs2,681 crore, NHB Rs2,434 crore, Union Bank of India Rs2,378 crore, Syndicate Bank Rs2,229 crore and Bank of Baroda Rs2,075 crore, Indian Bank Rs1,552 crore, Central Bank Rs1,389 crore, IDBI Bank Rs999 crore, and HDFC Bank Rs361 crore.