Dewan Housing Finance Corp. Ltd (DHFL) debt negotiations resolution plan seems to have hit a roadblock. It was objection by mutual funds to securitization deals commenced by DHFLNSE -2.33 %. This was because of the company’s repayment troubles began. It was said by three people with knowledge of the matter.
It is a 7% mark to market loss taken by the mutual funds on their exposure to DHFL. They suspected at a recent meeting that to avoid haircuts, bankers are buying DHFL’s retail portfolio piecemeal, said one of the three persons.
“Objection is raised in the recent meeting by mutual funds to 1,000 crore portfolio secured by DHFL in the past couple of months,” said the official. He had knowledge of the meeting. “Issues were also raised on a loan of 3,000 crore takeover by a large state-owned bank. This happened in the September quarter.” This reference was likely to Bank of Baroda heading to acquire DHFL loans against its exposure to the company.
DHFL was restrained by the Bombay HC from making any further payments to creditors following a request by mutual funds. It collectively owns almost 5,000 or close to 10%, of the total DHFL debt.
On October 19, ET reported that the banking regulator had denied a proposal by banks that would have allowed them arranging relief to the order of 6,000 crore.
DHFL, owning the financial system at least Rs 1 lakh crore, started facing recovery pressure immediately after Infrastructure Leasing & Financial Services (IL&FS) was defaulted on payments. But they have reached a deadlock, as several mutual funds have declined to sign the inter-creditor agreement, which is key to the plan of resolution.
Tags : DHFL, Infrastructure Leasing & Financial Services (IL&FS),