Shares of DHFL fell 17.5 per cent in intra-day trade on Wednesday after the housing finance company (HFC) said it will not allow premature withdrawal of deposits. However, the stock recovered to close at Rs 117.65 a piece, down 9.43 per cent from its previous close after analysts said such a move may not be bad to preserve the firm’s liquidity profile. In a letter to its distributors, DHFL had said it was solvent and had honoured Rs 30,000 crore of liabilities in the past and had no intention of defaulting.
According to an analyst tracking DHFL, the move by the company was avoidable, but was one of the few ways that it could have operated till it found strategic investors. The plan should be now to sell down assets as much as possible and generate liquidity for the short-term till the liquidity crisis gets addressed by the regulator and the new government.
The RBI board, however, has ruled out any liquidity line for now for the NBFCs.
The DHFL issue is expected to cast a long shadow on the struggling NBFC sector in India, analysts say.
“The NBFCs were struggling to raise fund for some time. They will have to continue to survive selling their portfolios and by taking loans from banks,” said Karthik Srinivasan, group head, financial sector ratings at ICRA.
“Raising non-convertible debentures would be difficult for NBFCs, but it was always a route for the firms with a good rating,” Srinivasan said. On Friday, DHFL’s credit ranking was downgraded by Brickwork Ratings to ‘BBB-Plus’ from ‘AA-negative’, and put on ‘a credit watch with negative implications’.
BBB is considered a non-investment grade rating. According to National Housing Bank (NHB) rules, such companies may not accept deposits.