INSUBCONTINENT EXCLUSIVE:
The Reserve Bank of India (RBI) rejected a proposal by banks that would have allowed them provisioning relief to the tune of Rs 6,000 crore
on borrowings by troubled mortgage lender Dewan Housing Finance Corp
Ltd (DHFL), said two people aware of the development
This could dent the December quarter earnings of Indian banks.
Banks have a total exposure of Rs 40,000 crore to DHFL and will be required
to make 15% provisioning on the account by the end of the December quarter.
The lenders had proposed the creation of a trust that would hold
51% of the company following the conversion of some part of debt to equity
exposure of around Rs 47,000 crore to DHFL
State Bank of India has an exposure of about Rs 10,000 crore to DHFL
Other state-owned lenders to DHFL include Bank of India, Canara Bank and Punjab National Bank
Union Bank of India leads the consortium of lenders while the steering committee includes SBI, Syndicate Bank and Canara Bank
There is an impasse over the resolution plan for the mortgage lender as several mutual funds are refusing to sign the intercreditor
While nonbanking lenders have taken a hit on advances to DHFL, banks have yet to designate such credit as nonperforming assets
