Mumbai: State Bank of India (SBI) and National Housing Bank (NHB) are heading towards an out-of-court settlement on the decade-old dispute pertaining to the securities scam. Sources say the parties are likely to go for a 50:50 split of the disputed amount, which was paid out by SBI to NHB a decade ago.

The principal amount that is being disputed is Rs 707 crore, which was paid by SBI to NHB in 1992. If the parties agree for a 50:50 split of the disputed amount, NHB will be the net gainer since it has been holding on to the principal amount and has enjoyed the interest income on it.

Such a settlement favouring NHB is likely, considering that the housing bank will have to face the burden of cash outflow. SBI will gain to the extent of the funds it receives, since it has fully provided for the disputed amount.

The Reserve Bank of India (RBI) had asked SBI to pay NHB the disputed amount, which the apex housing bank claimed, alleging that the amount had been wrongly credited to Harshad Mehtas account by SBI.

NHB, on its part, has the resources to meet the cash outflow, since it received a windfall Rs 1,025 crore earlier this year following an out-of-court settlement of its dispute with Grindlays. Of this, it has used Rs 700 crore to repay the loan it received from the RBI. The balance Rs 325 crore has gone to NHBs reserves.