DHFL Crisis Spreads: Will Not Allow Premature Withdrawals; Stops Accepting Deposits
Moneylife Digital Team 22 May 2019
In a move that has set off an alarm among investors and regulators, Dewan Housing Finance Ltd (DHFL) said it would neither accept new deposits nor allow premature withdrawals after its debt instruments were downgraded. 
“In view of the recent revision in the credit rating of our fixed deposit programme, acceptance of all fresh deposits, as well as renewals, has been put on hold with immediate effect,” read a DHFL e-mail to its customers.
Premature withdrawals would be allowed only in cases of medical or financial emergency, the DHFL communication said. 
“The company wants to make things clear to depositors who are not rushing to redeem their deposit units,” said a senior industry executive with direct knowledge of the matter. The decision comes just after rating agency CARE downgraded DHFL’s fixed deposit programme worth Rs20,000 crore.  
DHFL has about Rs8,400 crore of loan repayments and securitisation payouts coming up in the next eight weeks. DHFL’s available liquidity in April is pegged at Rs2,775 crore even as the company is seeking to sell more assets. The NBFC also assured its stakeholders that it would honour all upcoming payments and have already repaid Rs30,000 crore since September 2018. 
CRISIL Ratings downgraded Rs850 crore worth of DHFL commercial papers due to delays in fund inflows from asset sales and securitisation deals. Apparently, some investors have shown interest in buying stakes in DHFL. DHFL offered deposits to the public for tenors ranging from 12 months to 120 months and with interest rates ranging from 8.2% to 9.25% (for deposits of less than Rs5 crore).
"We assure you that we stand committed to honouring all our liability payments, and have demonstrated this by repaying liabilities amounting to approximately Rs30,000 crore since September 2018, without a single day's delay," DHFL stated in the e-mail.
DHFL’s shaky finances and its shady deals may lead to a huge upheaval in the financial system for which regulators seem ill-prepared.
Please read our exclusive reports on DHFL…
Ramesh Poapt
5 years ago
TOO BAD, DHFL! hope it will survive...and not go burst..
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