Banks plan to sell DHFL’s assets in three lots

Representational image. File

Representational image. File   | Photo Credit: REUTERS


Loans to homebuyers, firms and those for slum rehabilitation projects to be split

Lenders to the troubled mortgage financier Dewan Housing Finance Corporation Ltd. (DHFL) are planning to sell the assets in three parts for which separate bids will be invited.

In a recent interaction with the Reserve Bank of India (RBI)-appointed administrators of DHFL, bankers suggested that the assets should be sold in three lots — retail home loans, non-retail loans and slum rehabilitation project loans.

Typically housing finance companies extend retail loans (loans to individual home buyers) and non-retail loans (which are loans to companies and developers).

DHFL has also extended loans for slum rehabilitation projects. DHFL’s total loan portfolio is in the order of ₹85,000 crore and the borrowings are almost similar. Bankers said they expect good value for the sale of retail loans that comprises 40-45% of the loan book.

Chances of a significant haircut will arise from loans extended for construction of slum rehabilitation projects, bankers said.

“Someone may be interested in retail loans and some other bidder, in developer loans,” said the chief executive of a bank on the proposal to sell loans in three parts.

“This is the best possible solution,” the person said.

The RBI had initiated the process of resolution of DHFL under the Insolvency and Bankruptcy Code and the case had been admitted in the Mumbai bench of the National Company Law Tribunal (NCLT).

“Now, the committee of creditors (CoC) will take a call on whether to sell the assets in three lots,” said a senior official from a public sector bank.

If CoC approves the plan, three separate expressions of interest will be floated for sale of the assets.

After DHFL started to default on banks loans, the RBI, on November 20, superseded the board of DHFL and appointed an administrator. Subsequently, the banking regulator filed an application for initiation of corporate insolvency resolution process against the mortgage financier on November 29, 2019.

Banks’ exposure to the troubled mortgage financier is almost ₹40,000 crore while DHFL’s total debt is about ₹80,000 crore.

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Printable version | Jan 27, 2020 2:07:35 AM |

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