SBI on DHFL: Lender says challenges faced by accounts like DHFL factored in

In the wake of DHFL's delayed interest rate payments, various small and medium size investors have been raising doubts over the NBFC asset portfolio, which finally caught the attention of the largest Indian public sector banker SBI. The SBI looked to clear the air on the NBFC sector in general and DHFL in particular.

Speaking on the DHFL matter SBI spokesperson said, “SBI has been receiving queries on the impact that recent developments in accounts like DHFL could have on the Bank and on the system,” adding, “SBI has been very closely monitoring its exposures in the NBFC sector for the past 10 months and taking action as deemed appropriate. The overall quality of the NBFC asset portfolio in our books continues to be good. Challenges faced by accounts like DHFL have already been factored in when we have given our estimate for  the stress that the Bank would have to deal with in FY 19-20 and included in our estimates for slippage and loan loss provisioning for the current financial year.”

DHFL (Dewan Housing Finance Ltd) delayed the interest rate payments on June 4 that hit the NAVs (net asset values) of debt funds. Various mutual funds had put money into the company in the debt securities form. The NAVs of several debt schemes fell by 6-53 per cent on June 4, reflecting the marked-down value of their holdings in DHFL paper.

The non-banking finance company with a focus on housing finance has reportedly missed interest payments of Rs 960 crore. Valuation norms require a write-down in the value of assets in case of such payment delays.  According to the rating agencies, DHFL has Rs 850 crore of outstanding commercial papers of which Rs 750 crore is due in June 2019. The first CP maturity is on June 7, 2019. Scheduled aggregate cash outflows (including loan repayment and securitisation payouts) till July 2019 remains high at an estimated Rs 6,200 crore.