Mortgage lender Dewan Housing Finance Corp Ltd (DHFL) has delayed repayment of non-convertible debentures (NCDs) of about ₹900 crore as the company is facing a liquidity crunch. The NCDs were due for repayment on Tuesday.
In a late evening statement on Tuesday, the mortgage financier said this was technically not a default since there was a ‘cure period’ of 7 days, within which it could service its obligation.
“As per the Trust Deed, in the event that payment of interest on the NCDs is not met on the due date, there is a cure period of seven (7) working days to meet the obligation. In case the non-payment continues post that cure period¸ only then the same shall constitute an event of default,” DHFL said in the statement.
“The company is taking all steps necessary and shall ensure that the payment fallen due by way of interest is paid within the above mentioned Cure Period of seven (7) working day. Hence this is a delay & not default,” it added. Following the default by IL&FS in August, many NBFCs are facing liquidity crunch. To conserve liquidity, DHFL had stopped premature FD withdrawals. DHFL also sold its strategic retail assets including Aadhar housing, Avanse and DHFL Pramerica Asset Managers to ensure liquidity for repayments. In May, Care Ratings downgraded NCDs worth ₹17,655.12 crore to BBB- from A, due to delays in the announcement of a strategic investor that DHFL planned to bring in. Since September 2018, DHFL has repaid close to ₹40,000 crore of financial obligations, the lender said.
