After years of supporting small businesses, Delhi Financial Corporation to be wound up

“Therefore, keeping this in view, the Lieutenant Governor has ordered the winding up of DFC with effect from the date of publication of this notification in the official gazette,” it read.

What did the board do?

The DFC was set up under the State Financial Corporations Act, 1951, as a state-level development finance institution to provide term loans and other financial assistance to micro, small and medium enterprises in Delhi.

Its key objective was to support first-time entrepreneurs and small industrial, commercial and service-sector units that faced difficulties in accessing bank credit, with the objective of promoting industrial development, entrepreneurship and employment generation in Delhi. However, with the growth of private banks and the easing up of loan processes, the DFC failed to attract a large number of small traders and businessmen, said an official.

What happens now?

Officials said all operations of DFC shall stand ceased, including undertaking any fresh sanction or disbursement of loans. It shall function only for the purposes of winding up, which includes realisation of dues, recovery, settlement of liabilities, disposal or transfer of assets, and completion of statutory and administrative closure actions.

Officials said the government has also directed the constitution of a winding-up committee to implement the order. It will be headed by the Administrative Secretary (Finance), with secretaries from Industries, Law, Services and other departments concerned, and DFC officials as members of the committee.

“The Committee may co-opt or seek assistance of any officer, authority or agency of GNCTD and may invite any person(s) as special invitee(s), as required for the winding-up process,” read the notification.

Officials said with effect from the date of publication of the notification, all powers of the Board of Directors and the management of DFC shall stand vested with the Winding-up Committee.

The Committee will take custody of all assets, records, securities, cash and bank balances, investments and properties of DFC, and realise dues and pursue recoveries, including through OTS or settlement schemes, legal proceedings and enforcement actions, as permissible, officials said.

It will also undertake and complete finalisation of accounts, audit, statutory compliances and closure of operational arrangements, besides settling statutory dues and liabilities, including government dues, municipal dues, utility dues, taxes and other lawful claims.

Further, it has been tasked to identify, preserve, transfer or dispose of movable and immovable assets in a transparent manner and as per applicable rules, including obtaining approvals or consents from lessor authorities in case of leasehold properties.

The committee will also have powers to take decisions on employee management, including redeployment, continuity, terminal benefits and related actions, in accordance with applicable service rules and instructions and subject to advice of the Services and Law Departments. It will also continue, institute, defend, settle or withdraw any legal proceedings by or against DFC in the name of DFC through authorised officers, officials said.

Further, it has been directed to engage professionals or consultants as required, including auditors, valuers and legal counsel, in accordance with applicable procurement norms, and take all incidental and consequential steps necessary to effectuate the winding up.

Officials added proceeds of recoveries, monetisation or transfers during the winding-up process shall be applied towards winding-up expenses and liabilities in such manner as the Committee may direct, consistent with applicable law and government directions.

Officials said employees posted with DFC will continue to avail benefits such as pay, service conditions and GPF in accordance with applicable rules, notifications, government instructions and legal advice, and subject to availability of funds. “No action prejudicial to employees shall be taken, except in accordance with law and due process,” read the notification.

Further, all proceedings by or against DFC pending before any court, tribunal or authority shall continue and be dealt with by the Winding-up Committee through authorised officers, and DFC shall remain the entity for such purposes until final dissolution.

“Upon completion of winding-up and settlement or transfer of residual assets and liabilities, the Lieutenant Governor may issue a further notification declaring the final dissolution of DFC and such consequential directions as may be necessary,” read the gazette notification.