The Piramal Group has said that the Reserve Bank of India (RBI) is understood to have cleared the resolution plan for debt-ridden Dewan Housing Finance (DHFL) as approved by the Committee of Creditors (CoC). The CoC had approved a resolution plan submitted by a Piramal Group company, Piramal Capital and Housing Finance, last month.

“We understand that the RBI has approved the DHFL resolution plan from Piramal Capital and Housing Finance, submitted by the CoC,” Piramal Group has said in a statement. The resolution plan was approved by the CoC in its 18th meeting concluded on January 15, 2021.

According to the resolution plan, Piramal Capital will pay Rs 12,700 crore upfront to DHFL's lenders. Over five years, the lenders will be able to recover over Rs 37,000 crore. Financial creditors have claimed outstanding worth Rs 87,031 crore from DHFL.

In November 2019, the RBI had referred DHFL, the third-largest, pure-play, mortgage lender, to the National Company Law Tribunal (NCLT) for insolvency proceedings. DHFL was the first finance company to be referred to NCLT by the RBI using special powers under Section 227 of the Insolvency and Bankruptcy Code (IBC), 2016. The NCLT is yet to give its approval for the resolution plan.

Before referring the company to NCLT, its board was superseded, and R Subramaniakumar was appointed as the administrator. He is also the resolution professional under the IBC.

DHFL is being investigated by a number of agencies, including Serious Fraud Investigation Office, Enforcement Directorate and Central Bureau of Investigation for loans given by it to certain entities in a fraudulent manner.

Last week, DHFL posted a consolidated net loss of Rs 13,095.38 crore for the third quarter ended December 2020 against a net profit of Rs 934.31 crore in the year-ago quarter. Sequentially, the company witnessed widening of net loss from Rs 2,122.65 crore in the second quarter ended September 2020.