Lenders are meeting today for DHFL resolution plan, says Union Bank of India
Non-banking financial companies (NBFCs) have been given a liquidity boost by the government. Rajkiran Rai G, Managing Director and CEO of Union Bank of India discussed this and more.
Rajkiran Rai G, the Managing Director and CEO of Union Bank of India, spoke to CNBC-TV18 about the liquidity boost to the non-banking financial companies (NBFCs).
He also clarified about the news of eviction notice that a lot of families in Noida got from Union Bank of India.
“I confirm that the action is against the builder. There is no action against home buyers. All these notices which were issued by our recovery team are immediately withdrawn. So home buyers need not worry. The action will be against the builder only,” Rai said.
“With the Real Estate (Regulation and Development) Act (RERA) there is an ESCROW mechanism. Earlier days even though we maintained the ESCROW, the builders never used to credit this money to this account, so we didn’t have much control. With RERA coming in, we have better control,” he added.
On the NBFC incentive, Rai said, “This is a very good move. This is an indication from the government to give comfort to the bank that you need not worry particularly the large NBFCs which have a good parentage, they have no issues. It is mostly the medium-sized NBFCs where we have certain doubts for further funding them. This is coming as a good comfort from the government.”
“There is hardly 1.2 percent default in this pool buyouts because the recovery mechanism of these NBFCs are very good,” he said.
When asked about his in-house target in terms of pool purchase of NBFC loans, he replied, “The advantage with NBFCs is that their origination and the collection mechanism is very strong whereas banks do not have that capability. Their default rates – even in MSME space – is hardly 1-2 percent. So it is a good area to lend.”
Speaking about the DHFL resolution plan, he said, “I don’t think Securities and Exchange Board of India (SEBI) will stand in a way. We are meeting and we are going to discuss these issues. Hopefully, we will be able to finally take a call on the resolution plan given by the company and the way forward.”
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