board has asked the management to place its annual audited consolidated financial results, along with the joint statutory auditor’s report, for the fourth quarter of FY19 and FY19 by July 22. A top executive of a public sector bank said the exposure was huge and there were systemic risks in
While the audited numbers are a crucial input, the banks will not wait for the figures to come out. A parallel detailed assessment will be done in this case. Plus, a public issuance of non-convertible debentures (NCDs) is an additional factor banks have to consider while finalising restructuring. It continues to default on NCDs.
Banks have appointed Alvarez & Marsal (A&M), a global professional services firm, to monitor DHFL’s cash flows. The quality of the wholesale loan book is weak. This has caused pain, which is evident from the extent of fair value loss it has shown. While hammering out a recast package, the banks will have to consider the latest situation, lenders said.
Its provision and net loss on fair value grew almost 10-fold in the fourth quarter of FY19 to Rs 3,280 crore from Rs 383 crore in the equivalent period of FY18. The company has seen a huge increase in its bad assets as gross non-performing assets of the company for the fourth quarter of FY19 stood at 2.74 per cent against 0.96 per cent in the same period of FY18.
Banks are also concerned about the impact of losses and provisions for further loan impairments on the capital base of the housing finance company. There is risk of a further erosion in net worth, a senior banker pointed out.
The National Housing Bank (NHB), the supervisory body for housing finance companies, has made some observations on DHFL’s loans after inspection. Consequently, this brings down DHFL’s capital adequacy ratio to 10.24 per cent. The NHB has given DHFL 21 days to respond to these observations, which the company doesn’t agree with. For FY 19, the company posted a net loss of Rs 1,036 crore as opposed to a profit of Rs 1,240 crore in FY18.