Banks wary of converting their debt to equity till the fraud charges are addressed
After a damning KPMG forensic audit report and its board being superseded by the Reserve Bank of India on November 20, chances of Dewan Housing Finance (DHFL) enticing buyers grow slimer each day, reports Business Standard.
The troubled non-banking finance company (NBFC) is facing a barrage of investigations and court cases, besides a probe by the Central Bureau of Investigation (CBI) ordered by the Uttar Pradesh government and an expected probe by the Serious Fraud Investigation Office as well.
This has made banks wary of converting their debt to equity till the fraud charges are addressed, the paper quoted a source as saying. The company owes Rs 84,000 crore to banks, mutual funds and fixed deposit (FD) holders.
The crux of the issue is the KPMG report which established that DHFL promoters funnelled Rs 20,000 crore to multiple entities without appropriate paperwork or proper channels.
Any interested party would want clean books, and banks would thus have to make provision for the company in the December quarter after the RBI action, the source said, giving an example of JSW Steel’s Bhushan Power & Steel takeover which is in limbo over responsibility of liabilities.
DHFL owes almost Rs 15,000 crore to FD holders, one of whom has already approached the SC. A high court is also hearing multiple petitions against DHFL and the RBI plans to move the National Company Law Tribunal (NCLT) to start IBC proceedings.
Interested parties may also be wary of the various investigations and court cases throwing up more surprises.Of the affected stakeholders, FD holders are expected to be worst hit as IBC provisions specify repayment of secured creditors and employee dues, in that order, ahead of unsecured creditors – FD holders.Are you happy with your current monthly income? Do you know you can double it without working extra hours or asking for a raise? Rahul Shah, one of the India's leading expert on wealth building, has created a strategy which makes it possible... in just a short few years. You can know his secrets in his FREE video series airing between 12th to 17th December. You can reserve your free seat here.