• Business News
  • Insurance
  • Saving
  • Share Market 5Paisa
  • Loan
  • Mutual Funds
  • Investment
    • हिन्दी
    • తెలుగు
    • मराठी
    • বাংলা
    • ગુજરાતી
    • ಕನ್ನಡ
  • Close
  • Daily Show
    • 2+2=5
    • Take it Easy
    • Red Alert
    • Formula Guru
    • Money Gyan
    • Money Central
    • Money time
    • Jhatpat
  • Weekly Show
    • Money Comics
    • Economicom
    • Realty Check
    • Smile and pay
    • Money Tales
    • Spend Wise
    • Companynama
  • Insurance
  • Savings
  • Share Market 5Paisa
  • Loan
  • Crypto coindcx
  • Investment
  • Mutual Funds
  • Real Estate
  • Tax
  • Exclusive
  • Home » News » Debt » DHFL shock may keep retail investors off FD/NCDs of companies

DHFL shock may keep retail investors off FD/NCDs of companies

Those who have invested their life savings of over Rs 10 lakh will see most of it wiped out

  • Anto T Joseph
  • Updated On - February 15, 2021 / 08:39 AM IST
DHFL shock may keep retail investors off FD/NCDs of companies
Piramal Group has already received approvals from the Reserve Bank of India and other statutory regulatory bodies for the DHFL takeover

The fixed deposit (FD) and non-convertible debenture (NCD) holders of DHFL are staring at a huge loss of their investments in the ailing non-banking finance company, that recently underwent a long and arduous resolution process.

The direct impact of this resolution process is that raising retail funds through FD/NCDs with a promise of higher interest rate will no longer be an easy job for companies.

All those who have invested Rs 10 lakh and above in DHFL will see most of their investment wiped out as they are going to be paid pro-rata basis after other categories are settled as per the final proposal approved by the creditors.

Some of the depositors have now moved the National Company Law Tribunal (NCLT) against the move to hand over the company’s reins to Piramal Capital and Housing Finance Ltd (PCHFL), a wholly-owned subsidiary of Piramal Enterprises Ltd. But the move is unlikely to have any long-lasting impact on the overall resolution process, said a consultant who is assisting the creditors.

As per the resolution plan of PCHFL, FD holders will get Rs 1,241 crore, just around 23% of the total admitted claims of Rs 5,375 crore.

As per the proposal approved by the Committee of Creditors (CoC), those who invested Rs 2 lakh or less will get full payment of principle in cash, while the others who have invested up to Rs 10 lakh are likely to get only 43% of their principle in cash. The last category, all those who have invested Rs 10 lakh and above, will be paid pro-rata basis after other categories are settled, through a mix of cash and securities. The investors in this category may lose as much as 75% of their life savings.

In the e-voting that ended on January 15, the DHFL creditors had voted for the `waterfall mechanism’ for distribution of sale proceeds. According to the ‘waterfall’ mechanism, the proceeds from the sale of the liquidation assets of a corporate debtor could be distributed in a certain order of priority. Under the scheme, secured creditors have to be paid fully before any payments can be made to unsecured financial creditors, who in turn have priority over operational creditors.

Under the Insolvency and Bankruptcy Code (IBC), 2016, fixed deposit holders fall under the category of unsecured financial creditors in the pecking order.

Surbhi Tiwari, a student, recently tweeted that her father had put his entire life savings in DHFL’s fixed deposit scheme. “Now we are begging for our own money. I need money for my education,” she said.

Another investor, Anandkrishnan V Iyer, who had deposited Rs 5 lakh in DHFL, is facing a major erosion in his savings. He said DHFL had stopped paying interest since December 2019.

Piramal had promised to pay 10% more than what CoC pays the FD holders in the end. In the last round of bidding, rival bidder Oaktree Capital had made a similar offer as well, claiming that they would give Rs 300 crore extra to FD holders, compared to the Rs 150 crore promised by Piramal.

Download Money9 App for the latest updates on Personal Finance.

follow us

  • Facebook
  • Twitter
  • LinkedIn
  • Telegram
  • Youtube
  • Instagram

also read

  • Nine-point guide to reduce your debt

    Nine-point guide to reduce your debt

  • Cash-strapped? Here are four secured loan options you can consider

    Cash-strapped? Here are four secured loan options you can consider

Read more news on

  • DHFL

Latest Video

SEE MORE
TV9 Network and Money9 Presents Financial Freedom Summit

TV9 Network and Money9 Presents Financial Freedom Summit

Updated: March 15, 2023
Is the government asking us to save or not to save, that's the question! | Union Budget 2023 |  Money9 English

Is the government asking us to save or not to save, that’s the question! | Union Budget 2023 | Money9 English

Updated: February 2, 2023
Dear Finance Minister, getting a job or an admission in a good college is difficult, please help

Dear Finance Minister, getting a job or an admission in a good college is difficult, please help

Updated: January 31, 2023
Dear Finance Minister, will savings schemes get a makeover this Budget 2023?

Dear Finance Minister, will savings schemes get a makeover this Budget 2023?

Updated: January 30, 2023
A pensioner airs his grievances in front of Finance Minister ahead of upcoming Union Budget 2023

A pensioner airs his grievances in front of Finance Minister ahead of upcoming Union Budget 2023

Updated: January 27, 2023
A contractual government employee writes open letter to Finance Minister giving suggestions on Budget 2023

A contractual government employee writes open letter to Finance Minister giving suggestions on Budget 2023

Updated: January 25, 2023
A disappointed homebuyer writes open letter to Finance Minister failure giving suggestions for Budget 2023

A disappointed homebuyer writes open letter to Finance Minister failure giving suggestions for Budget 2023

Updated: January 25, 2023
A gig worker writes open letter to Finance Minister ahead of Union Budget 2023

A gig worker writes open letter to Finance Minister ahead of Union Budget 2023

Updated: January 24, 2023
Open in App

Related

  • Millions of retail investors burnt their fingers with DHFL shares

    Millions of retail investors burnt their fingers with DHFL shares

  • RBI bans DHFL from taking deposits under Pirmal management

    RBI bans DHFL from taking deposits under Pirmal management

  • BSE, NSE suspend trading in DHFL shares; what investors should do?

    BSE, NSE suspend trading in DHFL shares; what investors should do?

  • Sensex, Nifty may open in red; key things to know before opening bell

    Sensex, Nifty may open in red; key things to know before opening bell

  • Exchanges to suspend trading in DHFL shares from Monday

    Exchanges to suspend trading in DHFL shares from Monday

  • DHFL: 63 Moons to move NCLAT against Piramal bid

    DHFL: 63 Moons to move NCLAT against Piramal bid

More

  • How beneficial and economical is purchasing an electric vehicle?
    Tax

    Let Govt Fund Part Of Your Car!

  • Tata ends talks with Bisleri
    Bulletin

    Tata ends talks with Bisleri

  • Know the correct strategy of paying credit card dues!
    Savings

    Know the correct strategy of paying credit card dues!

  • Which is better active or passive fund?
    Mutual Funds

    Which is better active or passive fund?

  • Who should opt for Multi-Year Health Policy?
    Insurance

    Who should opt for Multi-Year Health Policy?

  • TV9 Sites

  • TV9 Hindi
  • TV9Telugu.com
  • TV9 Marathi
  • TV9 Gujarati
  • TV9 Kannada
  • TV9 Bangla
  • News9 Live
  • Know this india
  • Money9 Sites

  • Money9 Hindi
  • Money9 English
  • Money9 Marathi
  • Money9 Telugu
  • Money9 Gujarati
  • Money9 Kannada
  • Money9 Bangla
  • Topics

  • Insurance
  • Savings
  • Loan
  • Stocks
  • Mutual Funds
  • Real Estate
  • Tax
  • Crypto
  • Exclusive
  • Daily Shows

  • 2+2=5
  • Take it Easy
  • Red Alert
  • Formula Guru
  • Money Gyan
  • Money Central
  • Jhatpat
  • Money time
  • Weekly Shows

  • Money Comics
  • Economicom
  • Realty Check
  • Smile and pay
  • Money Tales
  • Companynama
  • Spend Wise
  • Follow us

  • FaceBook
  • Twitter
  • Youtube
  • Instagram
  • Linkedin
  • Download App

  • Andorid
  • ios
  • Contact Us
  • About Us
  • Advertise With Us
  • Privacy & Cookies Notice
  • Complaint Redressal
  • Copyright © 2022 Money9. All rights reserved.