Delhi government shuts down DFC, sets up panel for winding up

The Delhi government has shut down the Delhi Financial Corporation (DFC), its lending agency for micro, small and medium projects, citing mounting losses and severe financial stress. A nine-member committee has been constituted to oversee the winding-up process, officials said on Tuesday.

The finance department notified the winding up of DFC on February 6, following a Cabinet decision taken last month under the chairmanship of Chief Minister Rekha Gupta. The move came after the corporation’s board flagged “acute financial constraints” during a meeting held in November last year.

According to official documents, DFC’s share capital has been fully eroded, with accumulated losses touching around Rs 42 crore. The corporation was also unable to repay outstanding loans of nearly Rs 80 crore owed to the Delhi government as of September 2025. Its entire capital base and reserves had been wiped out, and the net worth showed a negative balance of about Rs 15 crore.

Invoking powers under Section 45 of the State Financial Corporations Act, 1951, the Lieutenant Governor of Delhi ordered the winding up of the corporation. With the publication of the notification in the Official Gazette, all DFC operations, including sanction of fresh loans, have ceased.

DFC will now function only for winding-up purposes such as recovery of dues, settlement of liabilities, disposal or transfer of assets, and completion of statutory and administrative formalities.

The winding-up committee, headed by the state finance secretary, has been vested with all powers of the Board of Directors. It will manage assets, pursue recoveries, settle dues including those payable to the Delhi government, and handle employee-related matters such as redeployment and terminal benefits.