Cash-strapped mortgage lender Dewan Housing Finance Corporation Ltd.’s (DHFL) plans to borrow ₹1,000 crore to ₹1,200 crore from banks every month — as part of its proposed resolution plan — may fall flat with the lenders, who may extend fresh loans only after a new promoter comes in.
According to bankers involved in the resolution of DHFL, since the mortgage finance company will get a moratorium on repayment, they won’t be extending any fresh loans.
DHFL wanted banks to lend so that it can start extending home loans to its customers.
“DHFL still has a cash flow of about ₹1,000 crore from existing customers which can be used for fresh lending since they do not have to pay interest to the banks due to the moratorium,” said a banker in the know of the developments.
“Banks will start fresh lending only after there is a new promoter,” the official said.
Talks with investors
DHFL is in talks with a few investors, and have kept banks in the loop, to sell a significant part of the promoters’ stake.
Promoters hold about 39.21% stake in DHFL. Bankers want promoters’ stake to fall below 10% after the stake sale as part of the resolution plan.
On Tuesday, the board of DHFL took on record the draft resolution plan formulated by the company in consultation with the special committee on resolution plan and its financial advisers viz. Ernst & Young, and approved the submission of the plan to the lenders, the company informed the stock exchanges.
DHFL said there would be no principal haircuts to any of the creditors, and there will be a moratorium on repayments. DHFL will also seek funding from the banks/National Housing Bank (NHB) to help commence retail funding activity, according to the plan. DHFL shares rose 32% to close the day at ₹55.40.
While banks want all the creditors, including mutual funds and insurance companies, to be part of the resolution plan, mutual funds have not yet given their consent and want approval from the markets regulator.
Banks have requested the Reserve Bank of India to take up the matter with SEBI so that the resolution plan can be implemented in totality. DHFL’s debt is about ₹80,000 crore.
Separately, the company also said that one of the joint statutory auditors of the company — Deloitte Haskins & Sells LLP — has resigned as statutory auditors with immediate effect.