DHFL resolution:SBI says lenders awaiting HC verdict on November 11

State Bank chairman Rajnish Kumar on Wednesday said the lenders will finalise the resolution plan for the troubled mortgage lender DHFLNSE 4.96 % after the November 11 hearing at the Bombay High Court.

Edelweiss AMC, Kotak Mahindra AMC, Axis Asset Management and Reliance AMC had moved the Bombay High Court seeking a direction to DHFL to disclose all its assets and liabilities and also to temporarily prevent it from making payments/disbursements to secured and unsecured creditors.

“We have to wait what happens on November 11. Then a call will be taken,” Kumar told reporters on the sidelines of the India mortgage conclave.

Under the draft resolution plan, the lenders would pick up 51 percent stake in the third largest mortgage lender by converting a part of their debt into equity.

The beleaguered home financier owes Rs 83,873 crore as of July 6 to banks, the National Housing Board, mutual funds and bondholders. Its secured debt is Rs 74,054 crore while the unsecured debt stood at Rs 9,818 crore.

Kumar said for SBINSE 1.04 %, the DHFL account is stressed but not an NPA in the September quarter.

On the High Court restraining DHFL from making any further payments to unsecured creditors, he said it would have a “very negative impact on the securitisation market as this is against the contracts.”

On resuming lending to the fund-starved NBFC sector, Kumar said SBI is not averse to lending to those NBFCs that have good rating and have lent prudently to its customers.

According to him, a housing finance company should focus on housing finance only. “If you are a housing finance company, be a housing finance company. If you are developer finance then be a developer finance company,” he said.

It can be noted that the main cause for the liquidity crisis at NBFCs is due to their large exposure to long-term project finance, which is funded with short-term borrowing.

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