DHFL lenders hope to recover ‘notional loss’ by December 2020

September 5, 2020 12:45 AM

According to initial findings of Grant Thornton, the monetary impact of the fraudulent transaction on the books of the company is to the tune of Rs 14,046 crore.

Additionally, there was a notional loss of Rs 3,348 crore to DHFL due to charging of lower interest rate to certain entities referred ‘Bandra Book Entities’ as per Grant Thornton report.Additionally, there was a notional loss of Rs 3,348 crore to DHFL due to charging of lower interest rate to certain entities referred ‘Bandra Book Entities’ as per Grant Thornton report.

By Ankur Mishra

DHFL lenders aim to recover the entire loss arising from fraudulent transactions. “We aim to recover the entire loss due to fraudulent transactions. We are hopeful that entire process should be completed by December, 2020,” a senior bank official told FE.

According to initial findings of Grant Thornton, the monetary impact of the fraudulent transaction on the books of the company is to the tune of Rs 14,046 crore.

Additionally, there was a notional loss of Rs 3,348 crore to DHFL due to charging of lower interest rate to certain entities referred ‘Bandra Book Entities’ as per Grant Thornton report.

Based on the findings of report, DHFL administrator R Subramaniakumar had earlier moved National Company Law Tribunal (NCLT) against 87 respondents, including its former chief executive officer (CEO) Kapil Wadhawan. Legal experts believe that lenders can initiate recovery proceedings against respondents, after the permission of NCLT.

Ashish Pyasi, associate partner, Dhir and Dhir Associates, said, “If NCLT comes to the finding that the transactions are fraudulent and other conditions in the provisions are met then it may direct those people to make contributions to the assets of the company as it may deem fit.“

Many lenders, including lead creditor State Bank of India (SBI), PNB and IndusInd bank, have already classified DHFL as fraud account. Banks need to set aside 100% of the outstanding loans as provisions, either in one go or spread over four quarters, after declaring an account as fraud.

“The bank has provided 100% in the June quarter on account of ‘fraud’ in an account, as per guidelines of Reserve Bank of India (RBI),” SBI chairman Rajnish Kumar said during June earnings call last month. DHFL is undergoing insolvency proceedings at National Company Law Tribunal (NCLT), Mumbai since December 3, 2019. The deadline for submission of final bids expire on September 16, 2020.

“At least 5-6 serious bidders are constantly in touch with us for submission of bids,” an official involved in the insolvency proceedings told FE. DHFL had earlier shortlisted 22 applicants for the company. The troubled lender had given applicants the option to bid for the whole company or in parts.

Of the total applicants, 14 had submitted expressions of interest (EoIs) for the entire business of DHFL.

KKR India Financial Services, Welspun Group, Adani Group, Oaktree Capital and Bain Capital were among those which placed EoIs to take over the entire business.

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