Banks to insist on new investor for DHFL before clearing resolution plan

Updated: November 5, 2019 4:14:47 AM

Lenders are set to ask a financial or strategic investor to take over the company ahead of clearing the resolution plan.

shfl, sbiFormer State Bank of India (SBI) executive Vaijinath M Gavarshetty took over as DHFL’s CEO on October 1.

By Ankur Mishra and Shritama Bose

The Reserve Bank of India (RBI) is understood to be uncomfortable with the idea of banks buying a 51% stake in Dewan Housing Finance (DHFL), sources told FE. Banks have been waiting for clarity from the central bank to implement DHFL’s resolution plan.

Meanwhile, a mid-sized public-sector bank (PSB) with an exposure of Rs 1,000 crore to DHFL is understood to have classified the account as a non-performing asset (NPA) on October 31. If a resolution eludes banks, their total exposure to DHFL of around Rs38,342 crore would need to be classified as NPAs.

Lenders are also set to ask a financial or strategic investor to take over the company ahead of clearing the resolution plan. While financial investors had expressed interest in acquiring a stake in the company, the deal hinged on the resolution plan getting a green light from all lenders and the regulators.

In the light of the findings of the forensic audit report, banks have turned more wary about going ahead with the proposed resolution plan.

“Earlier, the plan was that the resolution will proceed along with the forensic audit because we anyway had a six-month period after the signing of the ICA. Now that the findings of the forensic audit report have turned out to be quite serious, bankers will wait for comments from the company,” a senior executive with a PSB told FE, adding, “If the explanation is not satisfactory, banks are unlikely to go ahead with the resolution plan without first having a change in the management.”

Former State Bank of India (SBI) executive Vaijinath M Gavarshetty took over as DHFL’s CEO on October 1.

After SBI announced its results for Q2FY20, chairman Rajnish Kumar had said that the bank was holding Rs 900 crore worth of provisions against its Rs 7,000-crore exposure to a stressed housing finance company, understood to be DHFL.

Earlier, he had told shareholders at SBI’s annual general meeting that the bank’s exposure to DHFL stood at Rs 10,000 crore.

63 Moons moves HC against DHFL

63 Moons Technologies moved the Bombay High Court against Dewan Housing Finance Corporation (DHFL), seeking directions from the court to ensure promoters Kapil Wadhawan and Dhiraj Wadhawan do not leave the country until dues worth Rs 2000 crore are recovered.

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