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ICICI Bank, Union Bank, UCO Bank classify DHFL as NPA

A signboard of Dewan Housing Finance Corporation Ltd. outside its office on the outskirts of Mumbai.

A signboard of Dewan Housing Finance Corporation Ltd. outside its office on the outskirts of Mumbai.   | Photo Credit: Reuters

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Action as repayment has been due for more than 90 days

Even as a debt resolution plan for troubled mortgage lender Dewan Housing Finance Corporation Ltd. is being contemplated, some commercial banks have already classified the account as ‘non-performing’ as repayment has been due for more than 90 days.

ICICI Bank, Union Bank of India and UCO Bank have classified the loan as ‘non-performing’ in the current quarter. Other lenders such as Bank of Maharashtra, Bank of India, Punjab National Bank, Canara Bank, Syndicate Bank and Indian Overseas Bank, which have classified the loan in the special mention account (SMA)-2 at end September, may also tag it as a bad loan while finalising their accounts for the October-December period. If interest or principal is due for over 60 days, but for less than 90 days, the loan is categorised as SMA-2.

“We have classified the loan as NPA in the third quarter,” Union Bank of India MD & CEO Rajkiran Rai G said. Union Bank has exposure of about ₹2,000 crore. The bank has already made a provision of 15% for its exposure in DHFL.

State Bank of India is also likely to mark the loan as NPA as it has started to build provisions for the troubled account. SBI, which has an exposure of ₹7,000 crore, has already provided ₹1,400 crore for the stressed loan.

According to bankers, the last payment made by DHFL was on July 5, and hence, the 90-day period got over on October 5. A loan is classified NPA after interest or principal is due for more than 90 days.

A debt resolution process initiated by banks to recast loans of ₹80,000 crore of DHFL is yet to get finalised. Of this, the share of commercial banks’ is ₹40,000 crore.

The final report on a special review by KPMG of DHFL’s finances for the period April 2015 to March 2019 is awaited.

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Printable version | Jan 25, 2020 11:05:08 PM | https://www.thehindu.com/business/icici-bank-union-bank-uco-bank-classify-dhfl-as-npa/article29975242.ece

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