Banks expect to wrap up DHFL resolution by September-end

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Mumbai | Updated: July 9, 2019 7:51:39 AM

Bankers have indicated that agencies have been monitoring cash flows of the company since as early as February, which should give lenders a clear idea on the company's requirements with respect to further capital.

DHFL, DHFL commercial paper rating, Crisil, Icra, non convertible debentures, Mutual fundThe proposed resolution plan is expected to be placed before the consortium later in the week.

Lenders to Dewan Housing Finance (DHFL) expect to successfully resolve the account by September-end, though it was understood on Monday that some banks within the consortium are yet to sign the inter-creditor agreement, which is the first step towards resolution of the account.

“The intention was to wrap up signing of the agreement by July 5 though some banks are yet to. The formalities should be completed today or latest by Tuesday, at the latest,” a banker said on the condition of anonymity, but refused to mane any specific bank.

Another banker, who did not want to be named, was confident of completion of the resolution process between September 25 and 30. “We want to take all stakeholders along when we implement the resolution plan, and are in conversation with other parties including mutual funds and other pension and provident fund trusts,” the banker said.

At a meeting called by Union Bank of India last week, the consortium of lenders to DHFL decided on June 25 as the ‘reference date’, which essentially gives bankers 30 days from that day to review the account, and decide on the nature and approach for implementation of the resolution plan.

The Reserve Bank of India’s June 7 circular on ‘Prudential Framework for Resolution of Stressed Assets’ mandates that all lenders with exposure to a particular entity enter into an inter-creditor agreement (ICA) during the ‘review period’ to provide for ground rules for finalisation and implementation of the RP. Meanwhile, the proposed resolution plan is expected to be placed before the consortium later in the week.

While the second banker refused to delve into specific details of the resolution plan being prepared, he indicated that the debt of the housing finance company was being placed into various buckets – retail, wholesale and project loans for sake of determining the plan of action, which could include debt restructuring, debt-to-equity conversion, asset sales and debt securitisation along with capital infusion.

Bankers have indicated that agencies have been monitoring cash flows of the company since as early as February, which should give lenders a clear idea on the company’s requirements with respect to further capital.

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