What was DHFL crisis?

Creditors, mostly scheduled commercial banks (SCBs), rushed to tighten lending norms against NBFCs. This sparked a brutal liquidity crisis that affected all shadow lenders, big and small. One of those was Dewan Housing Finance Corporation (DHFL).

What caused DHFL crisis?

Issues at hand. DHFL has been facing a liquidity crisis since September 2018. According to the company’s filing in the exchanges, it has paid over Rs 41,000 crores to meet its financial obligations during this period—mainly through a combination of securitisation of assets and repayment collections.

What will happen to DHFL?

Upon allotment of equity shares to PEL, DHFL will become a wholly-owned subsidiary of PEL, it said, adding, Piramal Enterprises Limited will acquire 100 per cent of the equity share capital in DHFL. “The acquisition is in line with a strategic roadmap to transform and expand Group’s financial services business.

What is the NBFC crisis in India?

September 2019: The cost of borrowing continues to rise for NBFCs. Reliance Group decides to shut down Reliance Home Finance and Reliance Commercial Finance, which had become insolvent. Real estate financier Altico Capital defaults on interest payment and credit rating agencies downgrade its debt to junk status.

When did DHFL crisis happen?

In 2019, DHFL stopped payment of bonds and defaulted on its loan obligations. This caused its stock to fall over 97\% and a government intervention in the company.

Is DHFL is NBFC?

The crisis-hit DHFL was the first NBFC whose board was superseded by the Reserve Bank. Later it went through the corporate insolvency resolution process which was successfully resolved with Piramal Capital and Housing Finance Ltd acquiring the troubled housing finance company after paying creditors Rs 34,250 crore.

Should we buy DHFL now?

Please do not buy this. The resolution plan states that the company’s entire share capital (all current shares) will be cancelled. DHFL had gone bankrupt with more than Rs 90,000 crore in debt to various lenders, including banks, mutual funds and individual investors who kept fixed deposits with the company.

What is the NBFC crisis?

Why NBFCs are important for an economy?

NBFCs do play a critical role in participating in the development of an economy by providing a fillip to transportation, employment generation, wealth creation, bank credit in rural segments and to support financially weaker sections of the society.

What is the case of DHFL?

DHFL was the first to go for insolvency under the Insolvency and Bankruptcy Code. The Rs 37,250 crore resolution plan of Piramal Group for DHFL includes an upfront cash component of Rs 12,500 crore and a deferred component of Rs 19,550 crore.

Is DHFL a government?

DHFL is the second housing finance company to be established in the country….Dewan Housing Finance Corporation.