IL&FS mess: MCA flags liquidity crunch in DHFL, Indiabulls Housing Finance

IL&FS
Shares of DHFL and Indiabulls Housing Finance came under heavy selling pressure on Monday on the bourses following reports that the Ministry of Corporate Affairs has flagged the liquidity issue in these companies.

Counters of Punjab Housing Finance Ltd also saw investors offloading stocks, but the shares recovered later after the company came out with a statement on comfortable liquidity.

When asked about these reports, Corporate Affairs Secretary Injeti Srinivas said liquidity concerns are more pronounced in some companies, but it is an issue across the non-banking finance companies (NBFCs).

On whether the ministry raised the issue of liquidity problems in these three companies, Srinivas said, “When you do a sectoral study, you find that there is a concentration (of liquidity) in a few companies. However, the liquidity concern persists across the sector.”

He said there is no crisis-like situation, but measures need to be taken. “At the macro-level, adequate steps are being taken,” Srinivas said.

DHFL and Indiabulls Housing Finance stocks took a beating on Monday. While DHFL closed down 4.60 per cent to end at Rs 219.90 on the Bombay Stock Exchange, Indiabulls Housing Finance fell 4.24 per cent at Rs 834.30. PNB Housing Finance was also down to Rs 828 at one point of time, but recovered later to Rs 873.30 against Friday’s close.

PNB Housing Finance said it is comfortably placed with respect to its Asset Liability Management (ALM) position.

Giving break-up of the liquidity position, it said in the 0-1 year bucket, the company is broadly matched on ALM. Its short-term borrowing has reduced from 17.5 per cent in March 2018 to 11.7 per cent in September 2018.

“On 1-3 year bucket, we are borrowing long term — external commercial borrowings and more sticky public deposits and are comfortable with our mix. Further, our borrowing in the last one month represents our strength in the borrowing market as we raised more than Rs 60 billion through commercial papers (CPs) and $200 million through ECB under automatic route,” it said.

The Reserve Bank of India and the finance ministry have been deliberating on the liquidity issue problems of the NBFC sector. But, there have been differences of opinion between the two.

While the finance ministry believes that NBFCs, particularly the smaller ones and housing finance companies (HFCs), were facing some liquidity crunch, the central bank was of the view that the problem was not widespread, sources said.

As such, the RBI has ruled out a special refinancing window for non-banking financial companies (NBFCs) as the regulator feels that there is no systemic risk as of now since only about 200 of the 11,000-plus NBFCs in the country are deposit-taking.


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