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A consortium was set up to restructure DHFL’s debt after it first defaulted in June. But having struggled to come up with a rescue plan, the affected banks turned to the government for help, as per Reuters. As DHFL is a private company with limited links to the government, New Delhi is likely to stay clear, said the sources, who requested anonymity as the discussions were private.

DHFL is currently classified as a stressed account on creditor’s books but will slip to a non-performing asset (NPA) by December 31 unless a resolution is found. That means banks will have to set aside a higher provisioning amount and it will also impact the overall financial health of the lenders. If the government of India steps in, it will be a welcome step sources suggest that it is unlikely to happen.

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