Money & Banking

DHFL lenders to meet on July 10 to chalk out a loan restructuring plan

Surabhi Mumbai | Updated on July 04, 2019 Published on July 04, 2019

The consortium of lenders to Dewan Housing Finance Corporation (DHFL) is set to meet on July 10 to discuss a restructuring proposal.

“The banks, led by State Bank of India, are likely to meet on July 10 when they will discuss possible restructuring options and also put it forward to the board of DHFL. Lenders are keen to complete the process over the next three to six months,” said a person familiar with the development.

Debt conversion

The signing of the inter-creditor agreement between the lenders could be postponed to next week. While there has been some discussions among banks on conversion of DHFL’s debt to equity, sources said a final call is yet to be taken. Banks are, however, keen to continue supporting the beleaguered non-banking financial company (NBFC), which has been in the midst of a liquidity crisis since September last year.

Support to continue

According to sources, the large lenders, including State Bank of India, Union Bank of India and Bank of Baroda, are keen on continuing support to the NBFC and provide it with further working capital.

“As of now, there is no other option but to continue supporting the company and ensure that it has enough capital for operations. It has been trying to make repayments of its debt obligations. If it fails, there could be further trouble in the sector and it could impact other financial entities,” said a bank executive, adding that lenders are trying to iron out all differences and ensure speedy resolution. Meanwhile, promoters of DHFL are also in talks with strategic investors to infuse funds into the company through a stake-sale.

The lenders had earlier this week met with representatives of DHFL to discuss a resolution plan under the new June 7 circular of the RBI for resolution of stressed assets.

They have already agreed to sign an inter-creditor agreement and have also appointed advisers to work on the resolution plan.

The total exposure of the banking sector to DHFL is estimated at about ₹46,000 crore, including about ₹32,000 crore direct (loan) exposure and about ₹14,000 crore by way of investments in debt instruments issued by the company. As many as 35 banks have lent to the debt-strapped company.

Published on July 04, 2019
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