Essential Guide for FD and NCD Holders: Protect Your Investments Now

FD and NCD Holders: The DHFL Crisis and Your Urgent Protections

The recent events surrounding Dewan Housing Finance Corporation Limited (DHFL), once a beacon in India's housing finance sector, represent a stark warning for FD and NCD holders. The journey from its AAA+ rating to the National Company Law Tribunal (NCLT) referral under the Insolvency and Bankruptcy Code (IBC) on November 22, 2019, has plunged thousands of investors into a crisis of unprecedented proportions. The aftermath reveals a systemic failure impacting the lives of ordinary citizens who relied on DHFL's Fixed Deposits (FDs) and Non-Convertible Debentures (NCDs) for their financial security.

The Appointment and the Assault: A Pre-Determined Resolution The RBI's appointment of a Committee of Creditors (COC) following DHFL's IBC reference marked a turning point. While the official narrative focused on restructuring a struggling entity, the implementation, critics argue, deviated significantly from fairness. The COC, according to numerous accounts including those of affected investors, executed a plan that effectively deprived FD and NCD holders of their rightful dues. This wasn't a neutral process; it unfolded amidst accusations of monopolistic practices and crony capitalism, hallmarks of India's oligarchic political economy. The victims, predominantly middle-class and senior citizens, find themselves entangled in a system they cannot navigate, bearing the brunt of decisions made far from their reach. The result? A manufactured financial abuse, exacerbating the suffering already inflicted by the COVID-19 pandemic. Lives are shattered, savings vanished, and trust in financial safeguards eroded. The links provided offer deeper dives into these accusations and the human tragedy unfolding.

The Human Cost: Beyond Lost Money The impact transcends mere financial loss. The FD and NCD holders, many of whom invested their life savings, now endure extreme pecuniary miseries. For seniors whose primary income depended on FD interest, the cessation of repayments is catastrophic. Beyond the monetary, there's a profound psychological toll – anxiety, depression, and a pervasive sense of injustice. The pandemic, rather than offering relief, intensified their isolation and vulnerability. Their voices, captured in the referenced articles, paint a harrowing picture of desperation and betrayal. Their fundamental right to access justice and remedy, enshrined in the United Nations Guiding Principles on Business and Human Rights, is being trampled. The call to the UN, the ICJ, and OHCHR is a desperate plea for international oversight in the face of perceived domestic institutional failure.

The Appeal: Demanding Equity and Fairness The FD and NCD holders' appeal, directed to the highest office in the land – the President of India – underscores the profound inequities embedded within the IBC process as applied to their case. Their core argument is simple yet radical in this context: they should not be treated as creditors in the same vein as banks or financial institutions.

1. The NHB Safeguard Ignored: Section 29 of the National Housing Bank (NHB) Act explicitly mandates uninterrupted repayment to public depositors for housing finance companies. DHFL, operating as a going concern, blatantly violates this safeguard.
2. A Fundamental Injustice: FD holders are not lenders in the traditional sense; they are savers. Treating them on par with financial creditors, subject to haircuts and protracted resolutions, is unprecedented and fundamentally flawed. There exists no legal or precedence basis for clubbing public depositors with institutional lenders.
3. Public Interest Betrayed: The IBC's purpose is to prevent harm to public interest. The current process, critics argue, actively contravenes this mandate by causing immense harm to vulnerable savers. The plea is for the government to recognize the public interest imperative.
4. Powerlessness and Vulnerability: Unlike large institutions, individual FD and NCD holders lack bargaining power. They cannot absorb losses, delays, or restructuring clauses that banks routinely negotiate. Their sole demand – the return of their capital and accumulated interest – is just and reasonable.
5. Urgent Demands: The appeal outlines concrete demands: De-clustering: Separate FD holders entirely from financial creditors and banks in the resolution process. Immediate Full Repayment: Settle all mature FDs with accrued interest immediately.
   • Future Security: Ensure that any future owner of the restructured entity guarantees repayment of maturing FDs from the resolution proceeds, binding them contractually.

A National and Global Plea This is not merely a corporate restructuring; it's a matter of fundamental rights and national integrity. The suffering of FD and NCD holders under the IBC regime in the DHFL case threatens to undermine public faith in financial systems and regulatory frameworks. It demands intervention at the highest level to prevent further erosion of trust and to deliver justice to those who played by the rules and lost everything. The appeal extends beyond India's borders, invoking international human rights mechanisms to highlight the violation of the right to remedy for victims of business-related abuses.

Conclusion: Protect Your Investments Now For FD and NCD holders across India, the DHFL saga is a harsh lesson in financial vulnerability. It underscores the critical importance of vigilance, understanding the risks associated with different investment instruments, and demanding robust protection mechanisms. While the legal battle continues, the immediate priority is ensuring the rights of these investors are upheld. Their plight serves as a stark reminder that financial security is not guaranteed; it must be actively safeguarded through informed choices and relentless advocacy against systems that fail the vulnerable. Protect your investments now, not just for potential returns, but for the fundamental security they represent. Engage, question, demand transparency, and support efforts to ensure such exploitation becomes a relic of the past. The future of investor protection depends on it.