"Under the IBC, mutual funds are also considered as lenders and they will follow that rule. We have nothing to say on that," Sebi Chairman Ajay Tyagi told reporters here, without naming DHFL.
Resolution of financial service providers can now be taken up under the Insolvency and Bankruptcy Code (IBC), with the government notifying a generic framework for such cases.
Tyagi said that a distinction has to be made between ICA (Inter-Creditor Agreement) and IBC, while making it clear that mutual funds would join the process under the Code.
ICA was primarily for entities regulated by the central bank and akin to an "out of court settlement" before an asset goes to the National Company Law Tribunal (NCLT), he added.
According to him, Sebi had given mutual funds the choice on whether to join ICA or not and made it clear that if they join, it should be limited to clearing the stock of toxic assets.
"While doing so, Sebi had made it clear that mutual funds are different in structure as compared to banks," he noted.
RBI has appointed R Subramaniakumar, ex-managing director of Indian Overseas Bank, as administrator of DHFL, which is estimated to have debt worth over Rs 1 lakh crore.