State Bank of India very closely monitoring exposure to shadow banks

State Bank of India very closely monitoring exposure to shadow banks

State Bank of IndiaNSE 0.21 % said that they are “closely monitoring” the financial health of the troubled housing financiers Deewan Housing Finance (DHFL), who delayed on their interest payments to investors on Tuesday. 

The country’s largest lender affirmed that their exposure to NBFC sector still is “good” and that “appropriate actions” are being taken for specific stressed accounts. 

“SBI has been receiving queries on the impact that recent developments in accounts like DHFL could have on the Bank and on the system,” said an SBI spokesperson in a statement. 

“We have been very closely monitoring its exposures in the NBFC sector for the past 10 months and taking action as deemed appropriate. 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 FY 19-20 and included in our estimates for slippage and loan loss provisioning for the current financial year.” 

At least three rating agencies – Crisil, ICRA and Care Ratings – have already downgraded debt securities to ‘D’ or default category. SBI has a loan exposure of Rs.11000 crore in DHFL till last year’s December quarter as per latest available data. 

A CLSA estimate shows that of DHFL’s Rs.1 trillion debts as of December quarter of which 38% is with banking sector causing worry among investors. 

DHFL on Monday had issued a statement to its investors claiming that the non-payment of interests on borrowings ‘delays’ rather than ‘defaults’. In a separate statement on Wednesday following the downgrade DHFL said “the action taken by rating agencies is extremely surprising as the company has been making substantial efforts in ensuring no defaults on its financial obligation…Since September 2018, DHFL has repaid close to Rs 40,000 crores of financial obligation.”