DHFL pays Rs 962 cr towards non-convertible debentures within cure period

Crisis-hit mortgage lender Dewan Housing Finance, who had defaulted on interest payment on non-convertible debentures (NCDs), informed the stock exchanges on Tuesday that it has paid off its interest obligation worth Rs 962 crore within the seven-day cure period.
 
“The company has made interest payments in lieu of Rs 961 crore as committed to its debenture holders. With this tranche, the company confirms full payment and will seek rating upgrades from agencies,” the company said in a media statement.
 
The company added that since September 2018, it has managed to make liabilities payment of over Rs 36,000 crore without availing of any fresh funding from any lender. Also, they are committed to meeting all future debt servicing obligations in a timely manner, through further asset monetisation plans as well as onboarding of a strategic partner for its business.
 
DHFL had also paid about Rs 45 crore in interest and principal on certain debt instruments a day before. The company had reiterated its commitment to pay its dues within the seven-day cure period even as the credit rating agencies downgraded its commercial papers worth Rs 850 crore to default grade.
 
The company was expecting Rs 2,300 crore from buyers of its retail assets in Aadhar and Avanse. This, along with the securitisation of its retail lending, assets might have been used to pay off the debt.

After having met its debt obligation, the company’s main focus would be to rescale its business.
 
Things started going downhill for the mortgage lender when IL&FS in September 2018 defaulted on its debt obligations because of huge asset liability mismatch and fear crept in the minds of investors that housing finance companies such as DHFL and may also default on their debt obligations. Shares of DHFL tanked, despite the management ensuring everything was all right and that it was meeting all debt obligations.
 
Because of liquidity constraints after the IL&FS default, disbursal of loans by mortgage lenders fell drastically. Disbursal of DHFL in Q3 of FY19 saw a 95 per cent decline as it disbursed merely Rs 510 crore. In Q4, the situation worsened for DHFL with allegations levelled against the promoters of the company of siphoning off funds by an online portal resulting in an internal audit of the firm by an independent auditor.