DHFL Tumbles 18% as Company Stops Fresh Deposits, Premature Withdrawals
Dewan Housing Finance Corporation (DHFL) offered FDs to the public for tenors ranging from 12 months to 120 months with interest rates in the range of 8.2-9.25%.
File photo of DHFL logo (Image : Reuters).
Shares of Dewan Housing Finance Corporation Ltd (DHFL) dived as much as 18% in early trade on Wednesday after the housing finance company said it has decided to temporarily stop taking fresh deposits and hold premature withdrawals from existing deposit schemes as it tries to manage its tight liquidity position. The move comes after the recent downgrade of the credit rating of DHFL’s fixed deposit (FD) programme.
At 10:20am, the DHFL stock was trading down 12.7% to Rs 113.50 on BSE.
In a notice sent out to distributors and financial planners, DHFL said: “In view of the recent revision in the credit rating of our fixed deposit program, acceptance of all fresh deposits, as well as renewals, has been put on hold with immediate effect.” However, premature withdrawals would be allowed only in cases of medical or financial emergency if backed by proper documentation, the company added.
DHFL’s FD programme was downgraded by Brickwork Ratings India Ltd on Friday to BBB+ from AA- and had been put on credit watch with negative implications due to the limited build up of liquidity. Brickwork Ratings, in its rating release, pegged the size of DHFL’s fixed deposit programme at Rs 12,000 crore.
Dewan Housing Finance Corporation DHFL offered FDs to the public for tenors ranging from 12 months to 120 months with interest rates in the range of 8.2-9.25%.
In its email notice, DHFL Dewan Housing Finance Corporation tries to ease investor concerns by mentioning that it has never defaulted on any of its borrowings. “Over the last few weeks there has been several unwarranted speculation in the market about the creditworthiness of Dewan Housing Finance Corporation (DHFL). We assure you that we stand committed to honouring all our liability payments, and have demonstrated this by repaying liabilities amounting to approximately Rs 30,000 crore since September 2018, without a single day’s delay,” the company said.
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