RBI bars DHFL from accepting deposits under Piramal Group

NEW DELHI:  The Reserve Bank of India (RBI) has re-classified Dewan Housing Finance (DHFL) as a non-deposit taking housing finance company before approving the Piramal group’s bid to take over the stressed company, according to a NCLT Mumbai order.

Unlike DHFL, which accepts public deposits, acquirer Piramal Capital & Housing Finance Limited (PCHFL) is a non-deposit taking company. Sources say that Piramals wanted to convert PCHFL into a deposit-taking NBFC after acquiring DHFL but the Reserve Bank of India (RBI) has turned down that request.

The changes were made in February 2021, after the RBI gave a non-objection to the January 25, 2021 application by R Subramaniakumar, the DHFL administrator, citing Rule 5 of its FSP (financial services providers) Rules.  

"Pursuant to the FSP Rules, the RBI communicated its ‘no objection’ on February 16, 2021 for change in control/ownership/management in DHFL in terms of Rule 5(d)(iii) of the FSP Rules and also in terms of para 3 of NHB circular housing finance companies approval of acquisition or transfer of control Directions, 2016, subject to (inter alia) the condition that the deposit-taking status of DHFL will be revoked and merged entity of DHFL and Piramal Capital shall function as a non-deposit taking housing finance company," says the 86-page NCLT order.  

In the concluding part of the order, the bench reiterates that the resolution is subject to the fact that RBI’s non-objection, which is based on the condition that "the status of the corporate debtor (DHFL) is changed from a deposit-taking housing finance company to a non-deposit-taking company".

It can be noted that DHFL became the first financial services entity to be referred to the NCLT for bankruptcy. (With PTI inputs)