Banks, mutual funds and other big institutions which have invested a substantial amount in Dewan Housing Finance Corporation (DHFL) have started taking a closer look at the fate of their investments in the NBFC sector. The total liabilities of DHFL which was downgraded to the default category amount to Rs 102,563 crore.
“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,” said a State Bank of India (SBI) spokesperson.
“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 FY20 and included in our estimates for slippage and loan loss provisioning for the current financial year,” SBI said.
DHFL has around Rs 7,800 crore of bonds and non-convertible debentures repayment coming due in 2019.
Meanwhile, DHFL said that the downgrading by rating agencies is extremely surprising as the firm has been making and continues to make substantial efforts in ensuring no defaults on any bonds and repayment of its financial obligations.
“Since September 2018, DHFL has repaid close to Rs 40,000 crore of financial obligation. To ensure adequate liquidity to meet the repayments, DHFL also sold its strategic retail assets, including Aadhar, Avanse and DHFL Pramerica Asset Managers,” DHFL CMD Kapil Wadhawan said in a statement.
“These actions (downgrading) are unwarranted and the company is seeking clarification on the rationale that predicts DHFL’s inability to service pay–outs on the due dates. Such speculative rating rationale is not adequate,” DHFL said.