Dewan Housing Finance Corporation (DHFL), the third-largest pure-play mortgage lender, on Tuesday paid Rs 962 crore in interest on non-convertible debentures (NCDs), which fell due on June 4.
The lender has also informed stock exchanges that it has cleared all its overdue payments on NCDs, it said in a filing.
"In view of the confirmation given by the company dated June 7, 2019, we hereby confirm that the company has today made a full payment towards interest payable on secured redeemable non-convertible debentures (NCDs) issued through a public issue within cure period of seven working days," the company said.
Earlier, DHFL has received rating downgraded on its Rs 850 crore worth commercial papers (CPs) to default grade by Crisil and ICRA due to delay in meeting its obligations. The mortgage lender had defaulted on bond repayments on June 4.
Sources privy to the developments told CNBC-TV18 that with the help of internal accruals and the proceeds of Rs 500 crore it got by selling its entire 9.15 percent in Aadhar Housing Finance, were used for the payment of NCDs. Every month, DHFL collects around Rs 2,000 crore cash from its business and from June 10, money started to kick in.
Speaking to CNBC-TV18, Kapil Wadhawan, DHFL chairman, termed the crisis as a solvency issue, "I have heard some market experts talk about solvency issues, about DHFL being tagged with some other companies which have had similar problems from different sectors. We are a financial institution, we have underlying assets which keep on giving us cash flow even today. Now, if you abruptly stop the lending activity for a large institution like us with more than Rs 1.25 lakh crore worth assets under management and expect us to start paying down the liabilities of all creditors, even a bank today would not survive."
Shares of DHFL gained 6.5 percent after chairman Kapil Wadhawan told CNBC-TV18 that the company is not facing any solvency issues and is well on track with the NCDs pay-out.
Last week DHFL shares plunged 10 percent on Friday, extending previous session's fall, after rating agencies Crisil and Icra downgraded the company's Rs 850-crore commercial paper to ‘D’ from ‘A4+’ and ‘A4’, respectively.