A day after the Reserve Bank decided to refer crippled Dewan Housing Finance to insolvency courts, State Bank of India Chairman Rajnish Kumar said banks expect specified timelines of the Insolvency and Bankruptcy Code be adhered to in this case.
The Mumbai-headquartered pureplay mortgage lender has become the first NBFC or housing finance company to go for bankruptcy resolution.
“It is just taken to NCLT process, so whatever happens for the NCLT process, the same process will be followed here. There is a 330-day timeline that is also an extended timeline otherwise normally it should happen in 180 days. That is what the intent of IBC process, so let us hope those timelines are adhered to,” he told reporters here.
Last Friday, the government had notified Section 227 of the IBC empowering the RBI to refer financial sector players like NBFCs and HFCs, but excluding banks, with assets worth of at least Rs 500 crore to insolvency courts.
As of July 2019, the beleaguered home financier owes Rs 83,873 crore to banks, the National Housing Board, mutual funds and bondholders/retail bondholders. Of this secured debt is Rs 74,054 crore and Rs 9,818 crore is unsecured.
SBI is one of the lenders to DHFL. Most banks have or are going to declare DHFL account as NPA in the third quarter.
DHFL lenders were working on a resolution plan to pick up 51 per cent in the company by converting a part of their debt into equity. But the plan was yet to be formally cleared.
Talking about the decision of the Union Cabinet for the telecom sector, Kumar said this is a very important sector for the economy.
It is important that the sector is healthy, he added.
The government on Wednesday doled out a Rs 42,000 crore relief to debt-laden telecom companies after it agreed not to take any payments for spectrum they use for the next two years.
Source: Financial Express, November 21, 2019