Why a modification or a change is needed in IBC ?

Dear Friends,

IBC 2016 did bring many advantages in the resolution of NPAs of Corporate Accounts in a big way but it brought huge haircuts to the PSBs (Public Sector Banks) and the creditors money i.e. Banks money nothing but the Nation's Money or the Tax Payers Money is still yet to be recovered from the promoters in spite the reconstruction companies (the Private & the Government Run) & bad bank have already been constituted and operating from more than a year now. The money that needs to be recovered in one estimate as available in media is about rupees 10.40 lakh crores and in other estimates it is touching nearly rupees 15 lakh crores as of now if latest or new NPAs from all the credits extended till dates to the businesses & in retail credit to consumers.

What change I am suggesting is that which shall be cleared from one example of a resolution account. I am taking an example of DHFL that was merged or taken over by the PCHFL in a resolution process completed under IBC in Sept 2021. As we all know that DHFL promoters are facing many cases under PMLA as involved in Bank frauds in a big way by taking huge amounts of loans from the various banks of the order of rupees 90,000 crores that was siphoned to the shell companies and then by the Rotation of Funds in acquiring properties in India & Outside or putting in other group companies & family / children trusts & NGOs and also involved in the real estate properties acquired from the people those were involved in anti-national activities are responsible, so, the money must be recovered from them selling their ( the prompters) assets and out of personal guarantee amount provided and also from the assets of their trusts weather a family trust/children trust/or any other trust. Now I am taking some information from the social media and producing below for the perusal of public please.

The Piramal Enterprises declared that its subsidiary, Piramal Capital & Housing Finance Limited (PCHFL), has merged with debt-ridden Dewan Housing Finance (DHFL) after paying Rs 34,250 crore to the creditors of the troubled housing finance company i.e. DHFL. In January 2021, 94 per cent of the creditors of DHFL voted in favor of Piramal Group's resolution plan under the Insolvency Bankruptcy Code (IBC).In November 2019, RBI had referred DHFL - then the third-largest pure-play mortgage lender - for resolution under the Code. It was the first finance company to be referred to NCLT by the RBI using special powers under Section 227 of the IBC.

DHFL had gone bankrupt with more than Rs 90,000 crore in debt to various lenders, including banks, mutual funds and individual investors who kept fixed deposits with the company.

So, PCHFL has merged into DHFL with effect from September 30, 2021 pursuant to the reverse merger as contemplated under scheme of arrangement provided under the resolution plan, Piramal Enterprises said in a regulatory filing. So, a haircut of about 54 % was taken by the creditors and no assurance or protection was extended by the PCHFL to the shareholders as they could offer only 46% of the value of the share to the retail shareholders. So, it is one issue that needs to be paid a careful attention by the RBI or by SEBI or by MCA or combinedly by each one together through a single window.

2nd issue is that as DHFL on one hand was completely involved in illegal activities right from taking over Deutsch Post Bank Housing Business in 2010 / 2011 and then charging the consumer increasing interest on housing loans as per their whim & fancies, so, one side looting consumer by charging such high interest rates on home loans and on the other hands duping their / tax payer's money by doing bank frauds under PMLA. So, such interest rates as charged by the DHFL on home loans to the retail consumers from 2010-11 till 2011 must be reduced by 46% as haircut taken by the PSBs, as this loss is off Public Money. If not 46% at least 25 % waiver must be accorded to the consumers of DHFL from 2010 to 2021 and PCHFL also must extend it on these home loans that taken over by them from the DHFL.

So, above two changes must be considered by the GoI/MCA, RBI & SEBI so that consumers of home loans are protected by such frauds during a resolution plan. The RPs must also take in to consideration and they can still propose to the RBI to compensate shareholders and the home loan consumers out of this resolution. It is indeed a serious issue as brought out that has huge financial implications rather burden on Home Loan Consumers. The companies like DHFL must not be spared to do such a big loot of banks on one side and of consumers on the other.

Information is taken from the social media and the same data is analyzed in recommendations made to the GoI/MCA, RBI & SEBI in this post please.

Besides the above ,

1. IBC resolution must be over with in a year from the declaration of an account NPA.

2. More judges must be appointed at NCLT & at NCALT.

3. If any IBC case goes to the Hon'ble High Court or Hon'ble Supreme Court must be decided with in 06 months so that assets does not loose value and PSBs are bale to recover their maximum money.

4.All those responsible for grant of these big loans and greening of loans by changing the Government of India policies time to time, exerting pressure on PBSb, the CMDs of the banks, promoters, auditors, consultants, independent directors of RBI must be punished as all of them are free as of now. Until unless an example is set nothing is going to change as more & more companies shall be coming for IBC. The making of strict laws and court decision with in a year shall further bring culprits towards adequate punishment.