The Reserve Bank of India (RBI) on Thursday said it will not hesitate to take adequate measures to ensure stability in the non-banking financial companies (NBFC) space. These comments came after DHFL defaulted on its Rs 1,150 crore payments that led to multiple ratings downgrades.
Shaktikanta Das, governor, RBI, said, "RBI does not regulate housing finance companies (HFCs) but banks have significant exposure to these companies," adding, "RBI is mandated to look after overall financial stability, so we are actively monitoring NBFCs and HFCs development."
He further said, "Will ensure financial stability is not adversely impacted by any such developments."
RBI governor said the central bank has been monitoring the situation closely and will take steps when required. "We are monitoring the NBFCs situation very closely. We inspect NBFCs every year. We have data and know their position currently. RBI will not delay taking an action in this regard if and when required," he stressed.
RBI's comments came in the light of
DHFL Ltd who defaulted on a Rs 1,150 crore payment due earlier this week on its non-convertible debentures due to liquidity crunch.
The company said it is taking all steps necessary and shall ensure that the payment fallen due by way of interest is paid within the cure period of seven working days.
The company further clarified that it had made substantial efforts in ensuring no delay or defaults on any repayment of its financial obligations, including selling its stake in Aadhar, Avanse and DHFL Pramerica Asset Managers.
Shares of DHFL plunged nearly 18 percent on Thursday after rating agencies Crisil, ICRA and Care Ratings downgraded the company's various instruments.
Crisil said, "The downgrading reflects delays in debt servicing by DHFL on some of its non-convertible debentures (NCDs) - not rated by CRISIL - because of inadequate liquidity."
Global research firm CLSA, in its note hinted at a contagion effect due to DHFL's default. It said, "The recent default of DHFL on Rs 1000 crore in dues can expose Rs 1 lakh crore in borrowing to the risk of default/haircuts. The timely consummation of deleveraging/ recapitalisation is key to resume servicing."
Net asset values (NAVs) of various debt mutual funds crashed sharply on Wednesday as DHFL defaulted payments. Data showed all the mutual funds that have bonds issued by DHFL in their portfolio, such as DHFL Pramerica MF and Tata MF, saw their NAVs plunge by 50 and 30 percent respectively. Other mutual funds that saw significant drop in their NAVs were Reliance, Birla, UTI and DSP MFs.
Last month rating agency Icra had downgraded the company's payouts or pass through certificates (PTCs). Icra downgraded the PTCs issued under six mortgage loan securitisation transactions by DHFL.RBI and the Monetary Policy Committee (MPC) announced its first bi-monthly monetary policy of this fiscal where it cut benchmark repo rates by 25 basis points.