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Business News/ Companies / News/  DHFL resolution plan seeks moratorium on repayments

DHFL resolution plan seeks moratorium on repayments

The salient features of DHFL's proposed resolution plan include no principal haircuts to any creditor but a moratorium on repayment
  • It includes seeking funding from banks and National Housing Bank (NHB) for starting retail funding activity
  • DHFL shares were up around 8% in afternoon trade (Reuters)Premium
    DHFL shares were up around 8% in afternoon trade (Reuters)

    Mortgage lender Dewan Housing Finance Corporation Ltd (DHFL) on Tuesday said its resolution plan seeks moratorium on repayments but lenders will have to take no haircuts on the principal amount of their loans.

    In a regulatory filing, DHFL said that the salient features of its resolution plan include “no principal haircuts to any creditors; the proposed steps and measures towards addressing asset-liability mismatch and moratorium on repayments, and seeking funding from banks and the National Housing Bank (NHB) for starting the retail funding activity".

    According to the filing, the special committee for the resolution plan, which met on Tuesday, took on record the draft resolution plan formulated by the company in consultation with the committee and EY. The special committee, DHFL said, has approved the submission of the resolution plan to the lenders.

    Lenders to DHFL are looking for a resolution plan and have signed an inter-creditor agreement (ICA). They have also met institutional bondholders, comprising mutual funds, provident funds and pension funds, to explore options of working together under the resolution proposal.

    The mortgage lender has been among the worst hit by the liquidity crisis triggered by defaults at Infrastructure Leasing and Financial Services Ltd (IL&FS) that dried up access to funds for many non-banks.

    State Bank of India has an exposure of about 10,000 crore to DHFL, the bank’s chairman Rajnish Kumar told shareholders at its annual general meeting in June. Other lenders to DHFL include Bank of India, Central Bank of India, Andhra Bank, Canara Bank, Punjab National Bank and Corporation Bank. As of December, DHFL had an outstanding debt of 1 trillion, of which 38% was in the form of bank loans, 47% from the debt market and 10% through deposits.

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    Shayan Ghosh
    Shayan Ghosh is a national editor at Mint reporting on traditional banks and shadow banks. He has over 12 years of experience in financial journalism. Based in Mint’s Mumbai bureau since 2018, he tracks interest rate movements and its impact on companies and the broader economy. His interests also include the distressed debt market, especially as India’s bankruptcy law attempts recoveries of billions worth of toxic assets.
    Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
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    Published: 06 Aug 2019, 12:48 PM IST
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