Banks are hoping to recover loans worth ₹38,342 crore by implementing a debt resolution plan for the home financier and contain the risk of contagion in the Indian financial sector. The crisis has now hit DHFL’s recoveries from borrowers as collection agents have started quitting, the second person said, requesting anonymity. Banks often buy loans from shadow lenders comprising securitized retail loans to meet the shortfall in priority sector lending. “The government has just issued rules for resolution of stress in financial services providers under the Insolvency and Bankruptcy Code. I believe this fits well into the needs of DHFL’s lenders who are likely to use it as the current plan under the inter-creditor agreement (ICA) is yet to take off.

Source: Mint November 17, 2019 18:11 UTC