Indian mortgage lender Dewan Housing Finance Corp Ltd (DHFL) said it had only been able to make a 40 percent payment on unsecured commercial papers due on Tuesday, but vowed to pay the remaining 2.25 billion rupees ($32.49 million) in the coming days.
India’s shadow banking sector has been thrown into disarray after a series of defaults at large lender Infrastructure Leasing and Financial Services last year triggered fears about contagion in the financial sector.
Two major credit ratings agencies - ICRA, an affiliate of Moody’s, and Standard & Poor’s local unit Crisil - earlier this month categorised DHFL’s commercial paper at default levels for missing bond payments.
DHFL said in a regulatory filing on Tuesday evening it would make the outstanding payment in the next few days “once the surplus cash flow position improves” and stressed it was vying to turn the corner.
“The Company is already in the process of selling down its loan assets including wholesale project loans to make good all its obligations and maintain its 100% commitment to all its creditors as it has done since the liquidity crisis started in September 2018,” DHFL said.
DHFL also missed certain payments on bonds due in early June.
The problems facing India’s non-banking financial companies have piled additional pressure on Prime Minister Narendra Modi, who won a strong election mandate last month, even as the economic growth slipped to 5.8% in the January-March quarter, marking the lowest GDP growth rate in more than four years.