India’s central bank yesterday said that it will begin bankruptcy proceedings against Dewan Housing Finance Corp. (DHFL), a move that puts the country’s ailing shadow banking sector back in the spotlight, Reuters reported. DHFL’s owes its lenders nearly 1 trillion rupees ($14 billion), including several mutual funds, banks, pension funds, insurance firms and retail investors. The central bank’s move on DHFL comes after a string of defaults by rival IL&FS last year, which triggered fears about contagion in the financial sector and forced the government to take over the lender. The Reserve Bank of India’s decision on DHFL, the first of its kind, comes after the federal government this month empowered the central bank to refer cases of stressed banking finance firms with assets of at least 5 billion rupees to the insolvency court.
