DHFL gains 7% on report of lenders willing to extend fresh line of credit

Dewan Housing Finance Corporation Limited (DHFL) shares rose 7 per cent to Rs 81 in Wednesday's early morning trade on the BSE on report that its lenders were willing to consider the proposal of extending a fresh loan of Rs 12,000-18,000 crore over a year to the cash-starved mortgage lending firm.

As per this Business Standard report, the consortium of lenders, led by Union Bank of India, in the first round of lenders' meeting on Monday, discussed various modalities to ensure that their exposure to DHFL did not run into further stress.

“Since the issue is that of liquidity and not business failure, banks are interested in considering fresh credit lines to DHFL if it could help revive the company’s lending activities,” the report quoted a person aware of the development. The consortium is likely to extend loans of Rs 12,000-18,000 crore over a year, split as monthly credit facilities of Rs 1,000-1,500 crore, the report said.

DHFL hasn’t been able to disburse new loans for over six months since the liquidity crisis broke in September 2018. Confirming that additional loans could be provided as part of restructuring stressed assets and are well within the purview of the Reserve Bank’s June 7, 2019, circular, a person with direct knowledge affirmed the new line of credit might be extended as a short-term facility with a maturity of 6-12 months, it said.

In the past nine months, the stock has underperformed the market by falling 74 per cent as compared to a 11 per cent rise in the S&P BSE Sensex.

At 9:41, the stock was trading 5 per cent higher at Rs 79 as compared to a 0.06 per cent gain in the benchmark index.