The deadline for PC approval is September 25 and discussions are in the process of reaching some kind of agreement between lenders. A consortium of 27 lenders, including the State Bank of India (SBI), has signed a pact known as the Intercreditor Agreement (ICA) to restructure the debt of troubled mortgage lender Dewan Housing Finance Corporation (DHFL). MFIs who have filed an application with Bombay High Court should either wait for the final refund by a fair agreement with DHFL or wait for court instructions. In August, the lenders signed an inter-creditor agreement. But the problem is that the MFs do not arrive on board, even if Sebi allows them to be part of the ICA. The insurance supervisory authority Irdai also authorized insurers to sign ICA. The ICA sets the ground rules for the completion and implementation of the Resolution Plan (PC) for borrowers with credit facilities of more than one lender. Under this agreement, any decision by lenders representing 75 per cent of the total value of outstanding credit facilities (fund-based and non-fund-based) and 60 per cent of lenders per number is binding on all lenders. The sources said that the banks could provide DHFL with a capital-work loan of about 5,000 EUROS to ensure that their operations continue. The Inter-Creditor (ICA) agreement, reached by lenders to settle stressed assets, was signed by banks and almost all insurance companies that engage in DHFL. The investment fund industry`s (MF) hopes of being part of Dewan Housing Finance Corporation`s (DHFL) resolution process under the Inter-Credit Agreement (ICA) were dashed on Thursday, as the Securities and Exchange Board of India (Sebi) made it clear that only MF systems that have already got their hands on the debt commitment can participate in an ICA trial. In accordance with the Reserve Resolution Framework of 7 June, 75% of lenders must be accepted in value and 60 per cent in numbers and the agreement between creditors must be signed. So far, most investment funds have abstained from participating in the Inter-Creditor Agreement (ICA) for DHFL.
An ICA is a contract between two or more creditors who have granted loans to the same borrower. The ICA exposes the rights of each creditor. “The Securities and Exchange Board of India has already given the green light to investment funds to sign inter-creditor agreements if they put their exposures in their pockets,” he said, adding that liquidation will be detrimental because financial services companies are only valid as a day-to-day business.