DHFL building in Mumbai. (Photo: BloombergQuint) 

DHFL’s Lenders To Meet On July 1

Lenders of troubled non-banking finance company Dewan Housing Finance Corporation Ltd. are scheduled to meet on Monday, to seek a solution for the Rs 90,000 crore debt that is owed to them.

The consortium of 30 lenders led by state-run Union Bank of India, may also consider conversion of debt into equity that can make them the largest shareholder in the mortgage lender, sources said over the weekend.

The debt recast plan will be arrived at as per the Reserve Bank of India’s revised circular on resolving asset quality stress, they said.

The circular gives lenders a 30-day period since default to arrive at a debt recast plan.

DHFL's promoter group, the Wadhawan family which owns over 39 percent of the firm, has been looking at various ways to overcome the stress which first came to light late last year following the Infrastructure Leasing & Financial Services crisis.

These include selling stakes in group companies, while they are also reportedly open to giving up half of their stake in the listed entity.

DHFL’s debt has been downgraded by multiple rating agencies as the stress kept building up, while the company has also deferred announcement of quarterly results last week.

The RBI blames the crisis on asset liability mismatches at firms like DHFL, which typically borrowed short term for creating long term assets.

The banking regulator has vowed multiple times to do everything possible to ensure systemic financial stability.

In last week's financial stability report, it said the impact of a big housing finance company going down will be the same as a large commercial bank going down.

Bloomberg Quint

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