Debt-ridden Dewan Housing Finance Corp Ltd may be the first non-banking finance company (NBFC) to be sent to the National Company Law Tribunal for insolvency proceedings. The ministry of corporate affairs on November 18 issued a notification allowing NBFCs with asset size of Rs 500 crore or more can be sent to the NCLT for proceedings under Section 227 of the Insolvency and Bankruptcy Code.

Bank executives familiar with the matter told CNBC-TV18 that the NCLT may now be the best route for resolution of DHFL, which has been under stress for a year now. The key reason why banks may favour the bankruptcy law route is because of the multiple litigations surrounding DHFL, which had stalled the implementation of a resolution plan charted by lenders under Reserve Bank of India's June 7 circular for stressed assets resolution.

Given the lack of consensus among the various categories of lenders, resolution under the NCLT may be the way out, a senior banker with one of DHFL's largest lenders told CNBC-TV18 on the condition of anonymity.

The person quoted above said that banks need not approach RBI for taking the case to the NCLT as the RBI itself may give these directions under the recently notified rules for the resolution of stressed financial companies under section 227 of IBC. He added that the regulator may directly move the NCLT to file an insolvency application against DHFL and appoint an administrator to run the company, and only consult banks if needed during the process.

DHFL owes over Rs 38,000 crores to banks alone and has over Rs 85,000 crores liabilities in total which it owes to banks, mutual funds, pension funds, National Housing Bank, depositors and others.

First Published:Nov 19, 2019 12:05 PM IST