SBI may soon classify DHFL as an NPA

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Published: November 7, 2019 3:40:12 AM

“It was not an NPA at the end of September. We will see what happens by the end of December,” Kumar said on the sidelines of the India Mortgage leadership conclave.

SBI, DHFL , DHFL NPA, Rajnish Kumar, NPA category, NBFC, HFC, Dewan HousingOn the beleaguered mortgage financier’s proposed resolution plan, Kumar said that the lenders were awaiting forensic audit report on the alleged fraud at Dewan Housing.

State Bank of India (SBI) may soon classify Dewan Housing Finance Company (DHFL) as a non-performing asset (NPA). Chairman Rajnish Kumar said on Wednesday, “It is not classified as NPA yet, but it will be.” “It was not an NPA at the end of September. We will see what happens by the end of December,” Kumar said on the sidelines of the India Mortgage leadership conclave.

Sources told FE one PSU bank has already classified DHFL as an NPA and others would also follow suit. DHFL is widely believed to have made its last repayment on July 5. Once an account leaves dues unpaid for 90 days at a stretch, banks must classify it as an NPA as per RBI guidelines in June 7 circular.

Kumar said more instances of non-bank lenders slipping into the NPA category are unlikely to crop up. “I cannot say either way (whether more such credit events are expected). But, as of now, our take is that the rest of the NBFCs should be able to survive.”

On the beleaguered mortgage financier’s proposed resolution plan, Kumar said that the lenders were awaiting forensic audit report on the alleged fraud at Dewan Housing. He said a call would be taken on the resolution plan after the November 11 hearing in the court. Kumar said SBI would look at opportunities in the project lending space, which has been vacated by others.

Taking a dig at the housing Finance companies (HFCs), Kumar said “They should behave like housing finance companies first.” He would prefer the old rule of 75% (of an HFC’s book being mortgages) be brought back. Kumar gave open invitation to HFCs for tying up with SBI for loans. There are specific RBI guidelines for tie-up of NBFCs with banks for loans termed as ‘co-lending’, however no such guidelines exist for tying of banks with NBFCs. On whether the RBI should come up with similar guidelines for HFCs, he said “Don’t send anyone to RBI, send them to SBI.”

On the real estate industry, Kumar said real estate taxation is not favourable for companies. In its internal study, SBI has concluded that there has been a pick-up in the housing sales in Hyderabad, Kolkata & Chennai. However, it has declined in the NCR region, which, he said, is the worst hit. He said, “SBI is not seeing any elevated stress in housing portfolio, but we will have to watch.”

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