DHFL lenders may be forced to convert their debt into equity

Resolving the crippled mortgage lender DHFL's over Rs 90,000 crore debt is "not so easy" and banks are considering converting their outstanding into equity, Union Bank of India said. Rajkiran Rai, the managing director and chief executive for the state-run UBI, which is the lead-lender to the crippled housing financier, Tuesday clarified that if the banks take equity stake in the company, it will be for a short -term, which is till they get a suitor. DHFL owes over Rs 45,000 to banks, and the rest to other financiers including mutual funds, pension funds and insurers, which are not regulated by RBI. "It's not a normal resolution process. It's a financial company. Here the creditors are banks, insurance companies, pension funds and mutual funds. It is not so easy. In normal resolution, its banks and NBFCs, so this is new to us also," Rai told reporters on the sidelines of the annual banking industry event Fibac. DHFL has become the poster-boy of the NBFC crisis that afflicted the financial sector after the infra-lender IL&FS went belly up last September.