To protect their exposure of about Rs 46,000 crore to the cash-strapped Dewan Housing Finance Corporation Ltd (DHFL), the lenders have decided to sign the inter-creditor agreement (ICA) for implementing the resolution plan by July 5, banking sources told CNBC-TV18.
The large lenders to the company include SBI, Bank of Baroda, Bank of India, Union Bank of India, Canara Bank and Syndicate Bank.
The next lenders’ meeting for DHFL is likely to take place on July 5. The banks are expected to discuss options for restructuring the debt of the company after the ICA is signed. Securitisation of assets and conversion of debt to equity are among the options being considered.
The banks may also look at conversion of debt to equity as an interim measure if an investor is found for DHFL.
It may be noted that DHFL has more than Rs 1 lakh crore of borrowings; banks likely to have funded 40-50 percent of it.
Union Bank of India has taken the lead to call for a consortium meeting today, as one of the largest lenders to the NBFC, the sources said, adding that the resolution plan would have to be worked under the Reserve Bank of India's June 7 circular on stressed assets resolution.
As per the June 7 circular, banks are allowed a 30-day 'Review Period' after a borrower defaults to start working on a resolution plan, which is required to be implemented in 180 days, failing which banks have to make excess provisioning.
There are several options on the table for lenders, including securitisation of DHFL's assets as well as the conversion of debt to equity, said a source. But debt conversion would only be considered as an interim measure to transfer the stake to a new investor, added the source.
On June 4, DHFL missed its deadline to make Rs 1,150 crore payment to its bondholders, which it repaid after a gap of seven days and then again failed to make Rs 225-crore payment of unsecured commercial paper payment which was due on June 25.According to a Morgan Stanley report dated June 5, DHFL had a total debt of Rs 1,06,320 crore, which included bank loans to the tune of Rs 38,230 crore. State Bank of India, with Rs 8,800 crore of exposure is the highest lender, followed by Bank of Baroda with Rs 4,490 crore exposure, Bank of India Rs 3,560 crore exposure, Union Bank of India with Rs 2,510 crore, Canara Bank with Rs 2,400 crore and so on, the same report showed.