DHFL default: RBI to enusre financial stability

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Published: June 6, 2019 1:24:23 PM

The comments come following the bond defaults by mortgage lender DHFL on June 4, which led to a slew of rating downgrades of the company.

RBI Governor Shaktikanta Das (Reuters)RBI Governor Shaktikanta Das (Reuters photo)

The central bank is closely monitoring the developments in the NBFC sector and housing finance companies and will ensure that financial stability is maintained, governor Shaktikanta Das said Thursday.

The comments come following the bond defaults by mortgage lender DHFL on June 4, which led to a slew of rating downgrades of the company. The stock lost more than 20 percent Thursday.

“We have been closely monitoring the performance and developments in the NBFC and HFC sectors,” Das told reporters during the customary post-RBI policy conference.

Stating that the central bank is committed to have a robust NBFC sector, Das said, “the RBI will not hesitate to take any measure to ensure financial stability in the sector.” After DHFL’s bond repayment default, rating agencies Crisil and Icra had on Wednesday downgraded rating on its Rs 850-crore commercial paper to ‘default’ from ‘A4’.

The rating revision factors in further deterioration in DHFL’s liquidity profile and delays in meeting scheduled debt obligation on June 4, 2019, Icra had said in a note. The company has commercial paper worth Rs 750 crore maturing in June with the first repayment on June 7.

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