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DHFL hits 5% upper circuit amid reports Co may resume lending in few weeks

Shares of Dewan Housing Finance Ltd (DHFL) were locked in the upper circuit band of 5 per cen,t at Rs 15.8 on the BSE, on Thursday after media report suggested that the housing finance firm is expected to resume lending after a gap of seven months.

The corporation, which is under insolvency resolution process, is planning to resumt lending to “stay relevant in the business”.

“Central bank- appointed administrators at DHFL have decided to lend about Rs 500 crore every month beginning the next few weeks… Resumption of normal business operations, albeit on a smaller scale, is aimed at strengthening DHFL’s credentials as a ‘going concern’ and eventually helping secure better valuations at the closure of the ongoing resolution process,” business daily The Economic Times reported, quoting unnamed sources.

The report added that the consortium of lenders, led by the State Bank of India, granted the permission to resume lending in October.

Earlier in December, the National Company Law Tribunal’s (NCLT) Mumbai bench appointed R Subramaniakumar as administrator to steer the HFC’s resolution. DHFL is the first financial services firm that will undergo insolvency proceedings at the NCLT after the government notified the financial services insolvency law on November 15. READ HERE

The insolvency plea was moved by the Reserve Bank of India (RBI) against the company after it defaulted on interest payments for the external commercial borrowings (ECBs) availed by it from State Bank of India (SBI). DHFL has also defaulted on repayments to non-convertible debenture (NCD) holders in July.

At 10:09 AM, the stock was trading 3.99 per cent higher at Rs 15.65 on the BSE, as against an unchanged S&P BSE Sensex. About 1.1 mlillion shares have changed hands on the NSE and BSE till the time of writing of this report. So far in December 2019, the counter has slipped 24 per cent, as against a 1.6 per cent rise in the benchmark Sensex.

Source: Maalaimalar