DHFL defaults: SBI says taking appropriate measures

State Bank of India Thursday said it has been closely monitoring its exposures to the NBFC sector for the past many months and is taking appropriate measures to safeguard its interest. The statement comes after mortgage lender Dewan Housing Finance had defaulted on bond repayments on June 4. As of March 2019, SBI had an exposure of Rs 1.87 lakh crore to the NBFC sector, which has been in trouble since IL&FS went belly up last September.

The bank has been receiving queries on the impact of the developments in accounts like DHFL, could have on the bank and on the financial system, SBI said in a statement. "We have been very closely monitoring our 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," the bank said without specifying the steps or the quantum of exposure.

"We have already included the stressed NBFC accounts in our estimate for slippages and loan loss provisions for the current financial year," SBI said without quantifying it. During the annual earnings announcement, SBI had said that it had an exposure of Rs 3,487 crore to IL&FS, of which Rs 1,125 crore have become NPAs, he said, adding the bank has made 50 percent provision for the exposure.

On the spooked NBFC sector, Kumar said the stress shadow banking sector is not over yet and it would be very unfortunate if any default happens and warned that "we have to be very mindful and watchful of the NBFC sector." In FY19, the bank purchased Rs 19,000 crore of loans from NBFCs he added. Addressing the media after the second bi-monthly monetary policy announcement, Reserve Bank governor Shaktikanta Das said the central bank is very closely monitoring the troubles brewing in the NBFC and housing finance companies and assured to take all measures to maintain financial stability.

Following default on bond repayment by DHFL, rating agencies- Icra and Crisil downgraded its Rs 850 crore CPs to default or D from A4. The third largest pure-play mortgage lender DHFL reportedly owes over Rs 1 lakh to the system.

The company has CP worth Rs 750 crore maturing this month with the first repayment being this Friday. DHFL and other NBFCs are facing funding issues post a series of default by IL&FS, which since last September..