Even as a lenders' consortium is looking at a resolution plan for Dewan Housing Finance Limited, Bank of Baroda has entered into a transaction with DHFL to buy Rs 3,000 crore loans against its exposure to the non-banking finance company, Mint reported, quoting two people aware of the matter.
The bank adjusted the pool of loans made by DHFL against its loans to the non-bank lender, the above-mentioned sources, who did not want to be named, told the paper, adding that BoB's loan book quality will improve as the acquired loans are higher-rated assets.
“Now DHFL will only act as a collection agent for the bank for these loans. The bank will keep around 85-90 percent of the repayments to itself and the rest will go to DHFL," one of the sources was quoted as saying in the report.
With this, BoB's exposure of Rs 6,500 crore to DHFL will be pared by a little less than Rs 3,000 crore, another source told the paper.
“Securitisation of assets often happens, but what is different in this case is that the borrower, instead of using the money for liquidity needs, is using it to cancel future term loan repayments," a banking analyst was quoted as saying.