Monday, 30th October 2017

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DHFL settlement plan

The plan includes steps towards addressing the asset-liability mismatch

  • Published 7.08.19, 2:49 AM
  • Updated 7.08.19, 2:49 AM
  • a min read
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DHFL said the plan proposes moratorium on repayments and and fresh funding from banks and the National Housing Bank (NHB) for commencing retail lending. It added there would not be any haircuts to any creditor on the principal amount. iStock photo

Dewan Housing Finance Ltd (DHFL) has submitted a draft resolution plan to its lenders that proposes a moratorium on repayments and fresh funding along with assurances to the creditors that they would not take haircuts on the principal amount of their loans.

In a communication to the stock exchanges, the housing financier said a special committee on Tuesday considered the draft resolution plan, prepared in consultation with the committee and financial advisor Ernst & Young, and approved the submission of the draft to lenders.

DHFL said the plan proposes moratorium on repayments and and fresh funding from banks and the National Housing Bank (NHB) for commencing retail lending. It added there would not be any haircuts to any creditor on the principal amount.

The plan includes steps towards addressing the asset-liability mismatch. It is learnt the loans will be divided into three books: retail portfolio, project loans and slum rehabilitation authority loans.

The company owes around Rs 50,000 crore to banks. Apart from State Bank of India which has an exposure of around Rs 10,000 crore, the others include Bank of Baroda, Corporation Bank, Bank of India and Canara Bank. DHFL also owes more than Rs 40,000 crore to those holding its bonds and debentures.

The banks have already signed an inter-creditor agreement which deals with the resolution of the stressed assets. It is not known whether mutual funds will be a part of this pact.

Sebi has so far not yet given its approval even as insurance companies and pension funds are likely to join the inter-creditor agreement.

Investors gave a thumbs-up to the DHFL announcement with the stock zooming 32 per cent, or Rs 13.45, to close at Rs 55.40 at the BSE.