Fourteen entities are in a beeline to talk with the administrator of bankrupt money lender

Fourteen entities are in a beeline to talk with the administrator of bankrupt money lender

Fourteen entities are in a beeline to talk with the administrator of bankrupt money lender ‘DHFL’

DHFL emergency could present the defense for the NBFC stress test more grounded. Fears about the precarious position of china's economy are not simply limited to falling in growth rates. Some of the country’s most important companies are facing serious troubles that reflect both their management issues and also the state of the economy.

The key non-banking financial company, ILFS went bust also India's most loved private airline jet airways have crash-landed. Then DHFL(deewan housing finance limited) has seen its commercial paper downgraded to ‘D’ which means default. In other meaning, credit agencies do not expect DHFL to be able to pay back the short term debts it owes.

What is DHFL?

DHFL is an NBFC also known as shadow bank. This means it doesn’t have a banking license bit nevertheless involved in financial services.

What happened at DHFL?

In 2018, major NBFC’s went bust causing alarm throughout the industry because of which banks became much more careful about lending money to NBFC. Later on, January DHFL’s stock took a hammering by as much as 60% when cobra post claimed that the company’s promoters were involved in rs 31000 cr scam to siphon off money. Nevertheless, the combination of factors put DHFL in a difficult place, forcing the company to sell a number of its business to pay back on debt. But on June 4 the company failed to pay rs 900 worth of interest, prompting rating agencies to downgrade all of its commercial paper. An interim KPMG study of Dewan’s books earlier this year cited anomalies including 165 billion rupees of loans to entities connected to the company’s founders, equivalent to just under half of the banks’ total exposure of 380 billion rupees ($5.3 billion) to the shadow lender.

What does this mean?

This means that underlying assets that DHFL holds are valuable and are worth about 1 lakh crore, as a consequence if there is a solvency issue i.e the company’s survival is uncertain, it could be a huge blow to India's financial market. In another word, if the company fails, it will affect all of those who have extended credit to the company.
As a result of these 14 entities including foreign banks, private equity banks, and other local banks lender have begun talks with the administrator of bankrupt money lender ‘DHFL’ and its advisor EY to but company’s entire retail portfolio worth rs 32000 cr. The entities are expected to bag multiple real estate projects.
Interesting opportunity

DHFL is presenting an interesting opportunity by giving rs 30000 cr collection for the securitized pool, 18 branches office space in Mumbai and also confirmed its development focus on retail credit franchise.


A stress test for the NBFC companies has become necessary to restore investor confidence, particularly of foreign portfolio investors (FPIs), who hold a 16-74 percent stake in leading Indian NBFCs.

India’s economy actually faces severing challenges both on the domestic and international front. In a better time, with more money in the market, a number of these companies like DHFL or jet may have found it easier to dig their way out of the whole.


eStartIndia Team

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