NEW DELHI : Shares of insolvent Dewan Housing Finance Corp Ltd (DHFL) on Monday gained 5% in mid-day trade, a day after the committee of creditors (CoC) approved a plan that would enable resuming the shadow bank’s lending business.
At 12:15 pm, shares of DHFL traded at ₹16.85 apiece on the BSE. This, however, was contrary to the broader market sentiment. The benchmark BSE Sensex tanked 640 points or 1.6%, the biggest single-day fall since September 2019, tracking a spike in global crude oil prices, and the subsequent concerns over India’s import bill and current account deficit.
Global crude oil prices continued their rally for the second straight session, as fresh concerns over supply disruptions of crude oil emerged after US airstrikes killed top Iran Iranian commander General Qassem Soleimani early on Friday.
The committee of creditors of DHFL approved a plan under which the mortgage lender will resume advancing home loans beginning with ₹500 crore a month to arrest the decline in its loan book. The company has not disbursed loans in more than six months due to liquidity crunch that also led to a series of defaults in repayment of debt.
A document from the Reserve Bank of India-appointed administrator showed DHFL is recovering ₹1,700-1,800 crore from past loans every month and after setting aside money for securitization, payments and operational expenses, it can restart disbursements of ₹500 crore per month.
At present, DHFL’s assets under management stand at ₹1,19,952 crore, of which ₹63,690 crore are in retail loans and the rest in wholesale.
Lenders, bondholders, employees and other creditors to DHFL have claimed dues of ₹87,905.6 crore under the insolvency resolution process. This does not include holders of fixed deposits (FD) to whom DHFL owed ₹6,188 crore as on 6 July.
DHFL became India’s first non-banking finance company to face bankruptcy proceedings, after the Reserve Bank took the company to the Mumbai bench of National Company Law Tribunal. On 20 November, the RBI superseded DHFL’s board and later referred the mortgage lender to the NCLT. The central bank had cited governance concerns and payment defaults by the mortgage lender as reasons for superseding the board.