Cash-strapped DHFL seeks bankers' approval to restart loan disbursals

Plans to resume lending business from monthly EMI collections

Troubled housing financier Dewan Housing Finance Corporation (DHFL) may resume fresh disbursement of loans if lenders agree to the resolution plan, sources said. The company is expected to place the resolution plan with banks in the next few days. 

Sources said some of the key lenders to DHFL have consented to the company restarting its business using the equated monthly instalments (EMIs) that it collects, and its fresh loans could range between Rs 800 crore and Rs 1,000 crore a month. 

Currently, DHFL receives Rs 1,000-1,100 crore as monthly EMIs from customers. “Sales force across the country is undergoing training to restart business. Fresh disbursements would be only towards retail home loans,” said a source with knowledge of the development. However, the source confirmed that restarting business will be subject to the resolution plan being approved by lenders. 

“If lenders do not approve of the resolution plan, DHFL will have to look at other alternatives to restart the business,” said a person aware of the development. Loan disbursements have been put on hold since mid-October last year, within a month of the liquidity crisis hitting the financial services sector. 

Meanwhile, it is understood that DHFL is in the final stages of placing the resolution plan before the consortium of lenders. The company has formed a resolution panel to work on the resolution plan and the same may be placed before lenders by July 31. “Given the kind of reviewing these matters involve and the paperwork entailed, banks may take longer time to process the plan,” said a banker. 

“This is also the first large test case following the June 7 circular issued by the Reserve Bank of India to resolve debt issues,” a source said. People in the know said the long-stop date for approving the resolution plan is September 25 and the company will get 180 days from then to implement the plan. “If these deadlines are not met, banks will have to provide for their exposure in DHFL,” said a highly placed source. 

According to the terms in the resolution plan, the company will get fresh monthly credit lines of Rs 1,000-Rs 1,500 crore and the tenure of existing loans may be extended, if found suitable. Upon closing in on the resolution plan, a private equity player is also expected to pick stakes in DHFL. AION Capital (a joint venture between ICICI Venture and Apollo Capital Management), Cerberus Capital and Lone Star are said to be in the fray for a stake in the company. 

Getting back in business 

• Aims for fresh disbursements of Rs 800-1,000 crore a month
• DHFL receives about Rs 1,000-1,100 crore as monthly EMIs 
• Restarting business will be subject to lenders approving resolution plan  
• If lenders reject plan, DHFL to explore alternatives to restart business
• Disbursements put on hold since mid-October 2018