Lender led by State Bank of India (State Bank Of India) are set to record recovery of ₹37,400 crore this week, as Piramal Capital & Housing Finance(PCHF) Acquisition of Dewan Housing Finance (DHFL) should be completed within this month itself, several people familiar with the deal told ET.

Banks will get a mix of cash advances and non-convertible debentures (NCDs) over seven years to meet what is billed as the biggest recovery of stressed loans this fiscal.

The cash component, due to reach the respective banks this week, will help them write back provisions on these advances, potentially boosting the bottomline in the second quarter.

“Piramal will make the payment early on Tuesday,” said a person familiar with the distribution.

banking on

• State Bank Of India, boiIndia’s top beneficiaries
• About Rs 17,400 crore likely to be distributed among creditors by 30 September
• The biggest recovery is likely for banks in this financial year
• An amount can be set aside till the disposal of NHB’s petition on priority fee in NCLAT

Recovery includes 20% cash, 23% NCDs

“Disbursement from fixed deposit holders to banks – will be completed by September 30. About 20% of the recovery is in cash, which will flow to lenders for this quarter,” said a person familiar with the disbursement.

Financial creditors led by SBI had accepted claims worth Rs 87,000 crore. Of this, SBI alone had an exposure of Rs 7,267 crore to the distressed home financier. Bank of India (BoI) had claimed Rs 4,125 crore and Union Bank of India (UBI) Rs 3,605 crore.

Piramal’s total bid is Rs 37,400 crore, which equates to about 43% recovery on accepted claims. This recovery is further divided through 20% cash and 23% NCDs.

From these calculations, SBI will have a profit of Rs 1,453 crore in recoveries, which will be written back from the provisions of this quarter. BoI will gain Rs 825 crore and UBI will get Rs 721 crore. This amount will directly go into their profits in this quarter.

An executive quoted above said, “These writebacks will account for 100% for this quarter. Banks will benefit, assuming they do not need to provide some fresh slippages during the quarter.”

milestone resolution

In June, the Mumbai Bench of the National Company Law Tribunal (NCLT) had approved PCHF’s resolution plan for DHFL after the group was declared the preferred bidder, securing 94% of the creditor votes.

DHFL’s resolution is a milestone for the five-year-old Insolvency and Bankruptcy Code, which is the first debt resolution in a financial company under this recovery mechanism.