Delhi’s Financial Corporation on the Brink of Closure; CM Rekha Gupta Orders Comprehensive Review

New Delhi:
The Delhi Financial Corporation (DFC), the state’s financial institution, is facing a severe economic crisis, leading the government to consider shutting it down. According to official sources, the DFC board recently acknowledged that the corporation’s entire equity has been wiped out. Chief Minister Rekha Gupta has directed the Finance Department to conduct a detailed analysis of the board’s recommendation and present a proposal before the Cabinet.

A Burden on the Government
During a high-level review meeting, Finance Department officials informed the Chief Minister that the corporation has become financially unsustainable and is now a liability for the government. The CM reportedly stated that the government cannot continue supporting an entity that fails to provide any public benefit. She instructed officials to initiate a legally sound and systematic process to terminate DFC’s long-standing non-performing contracts and operations.

Years of Continuous Losses
Sources revealed that DFC has been running in losses for several years. The board report highlighted that the corporation’s net worth has dropped to just ₹15.45 crore. As of 31 March 2024, its NPA (Non-Performing Assets) level had risen to 55.80%. Despite increasing expenses, the corporation has not issued any significant loans in recent years. It is surviving by prematurely breaking fixed deposits to pay salaries and meet other financial obligations.

₹80 Crore Outstanding Dues to Government
Data presented before the Chief Minister showed that DFC owes nearly ₹80 crore to the government, an amount the corporation is incapable of repaying. Auditors have warned that the institution cannot sustain itself in its current form. Against 148 sanctioned posts, only 28 employees remain, while employee-related liabilities have surged to ₹66 crore, as assessed by LIC.

Why Did DFC Collapse?
The downfall of DFC is attributed to multiple factors—structural limitations under the State Financial Corporations Act, costly borrowings, outdated manual systems, shortage of skilled staff, and the shrinking industrial base of Delhi. As MSME financing shifted to modern financial platforms and banks offering low-interest loans, DFC’s traditional lending model became obsolete. Similar challenges are being faced by most State Financial Corporations across India.