DHFL: Investor Urges RBI To Stop Fraud by Administrator, Debenture Trustee, Banks & Advisors upon FD & NCDs Holders
Moneylife Digital Team 15 January 2021
An investor of Dewan Housing Finance Corp Ltd (DHFL) has urged Shaktikanta Das, governor of Reserve Bank of India (RBI) to stop 'self-serving fraud' being allegedly perpetrated by the administrator, debenture trustees, banks and their advisers upon fixed deposit (FD) and non-convertible debenture (NCD)-holders of the crisis-hit company through "illegal, unfair and inequitable resolution proposals put to vote before helpless FD and NCD holders."
 
In a letter to the RBI governor, Jyoti Khemka, the investor, alleges that bankers and their appointed advisers are ripping off the helpless FD and NCD-holders. "DHFL was not an unregulated entity. The poor FD and NCD holders relied upon audited financial results, 'AAA' credit ratings, trustee and regulatory bodies like SEBI, National Housing Bank (NHB) at the time of investing their hard-earned money. They cannot be placed now on an equal footing with banks who have the necessary wherewithal to carry out due diligence before lending public money." 
 
"The debenture trustee Catalyst Trusteeship has failed miserably in its fiduciary duties to watch the interest of NCD holders. It has been acting hand-in-glove with the cronies (as also affirmed by the Bombay High Court). The DHFL administrator too is silent spectator in the present resolution proceedings. Instead of watching interests of the FD and NCD holders, he is using the company money to protect the interests of credit rating agencies and debenture trustees in petitions pending before the Punjab and Haryana High Court and District Consumer Forum, Chandigarh," the letter says.
 
According to the letter, if future recoveries are to accrue to financial creditors as in the Oaktree resolution plan, the new management of DHFL would not exercise due diligence in the Section 66 applications pending before the National Company Law Tribunal (NCLT). It says, "The total value of claims filed by the DHFL administrator is over Rs33,000 crore. The earlier promoter of DHFL and entities, who committed the fraud would benefit at the cost of public money. Hence RBI must step into the shoes of the DHFL administrator in all applications filed under section 66. Future recoveries in section 66 applications must accrue to the financial creditors. The evaluation of various resolution plans must be revised accordingly and put to vote again." 
 
As Moneylife pointed out FD and NCD-holders are the biggest lenders to DHFL at Rs45,000 crore and they represent the savings of ordinary people. Another Rs35,000 crore is owed to commercial banks; but they dominate the committee of creditors (CoC) and will influence the outcome. The losses, even after a successful sale, are massive—over Rs52,000 crore. Other than those who invested up to Rs2 lakh (who will get back their entire principal, not interest), the FD-holders stand to lose 75% of their investment, while those with secured NCDs will lose 60%. 
 Moreover, under the Piramal plan, any money recovered from the Wadhawans will go to the DHFL while financial creditors will get nothing. In effect, whichever bid is accepted, it seems like a raw deal for FD and NCD-holders who include individuals, trusts, pension funds and companies who went by the AAA credit rating (highest) accorded by rating agencies to the DHFL group, despite plenty of talk about their shady dealings. 
 
The key issue here is: What happens to Rs33,309 crore siphoned away by the Wadhawans which was established by the Grant Thornton forensic audit report? Can any part of it be recovered? If, yes, who gets the recovery proceeds, if any? Shockingly, this money may go to the new bidders, depending on who wins. At the moment, there are two serious bids for DHFL: one from the Piramal group and another from Oaktree Capital Management. (Read: DHFL's FD and NCD-holders May Lose Twice Over unless They Intervene
 
Comments
nitindesai1949
4 years ago
If interest of the majority investors is not served then it is better to liquidate the company instead favouring few at the cost of lakhs of voiceless investor.
I think it is a fraud of RBI DHFL CoC Piramal Group and administrator.
naganarasimha4610
4 years ago
Obviously the FD holders and NCD holders have invested more than the banks and other institutional investors. They did so by the credit rating given to DHFL by the credit rating agencies. Now the retail investors are at the receiving end set to lose over 75% of their investment. This is huge loss to retail investors. It is time for the RBI and NCLT to wake up and correct the mistake committed by CoC.
rentalsdayanand
4 years ago
Is there any NCD investor group that one can join to take up the issue. How to contact 63 moons
ssundergupta
4 years ago
यह गरीब लोगों के पैसे की गवर्मेंट एजेंसियों
द्वारा मिलीजुलीी लूट है जिसमें आरबीआई, फाइनेंस मिनिस्ट्री से लेकर पीएमओ ऑफिस तक सामिल है
silveroak1900
4 years ago
Is there any group of NCD holders that one can join to take up the issue.?
tillan2k
4 years ago
RBI is unfit as regulator of financial Institutions .. Looks they have been captured like other regulators who are capatured by regulatees
nitindesai1949
Replied to tillan2k comment 4 years ago
If rbi and government can not protect the investors the NBFC and other companies should not be allowed to collect money from Public


saharan.rakesh
4 years ago
Pls advice for further action
nitindesai1949
Replied to saharan.rakesh comment 4 years ago
Pray to god
Kamal Garg
4 years ago
I think all FD and NCD holders should raise the issue to include their lending/debt to financial creditors also to be included at full value at the time of resolution and representation also in the CoC. Currently only banks and financial institutions are entitled to represent in the CoC with individual FD and NCD holders left in lurch.
saharan.rakesh
Replied to Kamal Garg comment 4 years ago
How all NCD holders can come together. We must form a group and take it forward
vaibhavdhoka
4 years ago
Individuals should better understand that they are guinea pigs before government or any regulator. SEBI or any other regulator dictates are sham they have no accountibility,but they earn huge benefits for giving favourable orders. The same game is being played in Neesa Liesure Ltd case before Ahmedabad bench of NCLT. Individuals investment are draconian till the money is repaid.
tillan2k
Replied to vaibhavdhoka comment 4 years ago
Ahmadabad is second financial capital of India. Financial capital is about with felons, white collar criminals, and swindlers and Ponzi scheme operators . u will see large number of suicide on financial distress in Gujarat . NEESA group is All india smooth operating swindlers .
perfectpointjal
4 years ago
DHFL are charging very high rate of interest. (ROI) (11.67%) they donot have any grievance cell, they mentioned to mail on ids like [protected]@dhfl.com and [protected]@dhfl.com but nobody responding on mail.
I am paying higher interest rate also dhfl no given benefits of PM Aavas Yojna

I want to shift my loan
.can this be solved out at higher level ..
r_ashok41
4 years ago
It is surprising that when so much hue and cry is being raised everywhere how can RBI governor and also Finance ministry sit and do nothing as if it is not their job .The least they can do is to deal with the situation in a manner so that FD and NCD small investors are saved than the big creditors siphoning off the money with other people and doing nothing for the small investor.Wake up RBI and Finance ministry and put a strong person who will notplay into the bigwigs hands.
tillan2k
Replied to r_ashok41 comment 4 years ago
I appreciate ur frustration but look at if agents charge fee of 8 crores for getting lucrative seat on all India bodies they have to recover the investment
kashvikapil
4 years ago
Thanks money life team for understanding and writing for the poor retail ncd holders and fd holders. at least someone who stood up for us. no one is thinking of retail ncd holders who trusted our financial system including rating agencies, regulators of public issue of bonds i.e RBI,SEBI,NHB etc and law enforcement agencies but got nothing.further, no one finds it worthy to talk about the hard earned money lost by retail ncd holders and FD holders. dont know its a scam or fraud or something else . Rs 52000 crores of assets lost .don't know who is beneficiary - promoter or the bid winner, administrator or any one else but i do know that the loser is again the poor common man i.e retail bond holder and FD holder.No one dares to stand for us.I feel like I am living in India 1990 and not in India 2021.
valentine.barboza
4 years ago
Investors don’t get bullied .. this government is taking all of us for a ride. Pls include the pm in an affidavit.. the finance minster is mindless . We need drastic measures
pradeepbm
4 years ago
while my money is stuck in dhfl ncd, what is your recommendation for pfc ncd next week ?
kashvikapil
Replied to pradeepbm comment 4 years ago
not worthy. 90-100 bps above 10 year G sec yield doesnt make it attractive for this NBFC
Kamal Garg
Replied to kashvikapil comment 4 years ago
In now a reversal and rising interest rate scenario (remember RBI did not change any thing from its accommodative policy in the last Policy meet), the interest rate offered by PFC is not very attractive.
valentine.barboza
Replied to pradeepbm comment 4 years ago
File a case against dhfl.. don’t let them go scott free...
pradeepbm
Replied to valentine.barboza comment 4 years ago
thanks for suggestion
valentine.barboza
Replied to valentine.barboza comment 4 years ago
Auditors r .... we know ...
palaparthi59
4 years ago
Catalyst Trustees erstwhile GDA Trustees (GDApte & Co. Chartered Accountants) also auditors for some lenders of DHFL.
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