DHFL allowed to pay banks and NBFCs with which it has securitization deals: Bombay HC

The financial lenders of Dewan Housing Finance Corporation (DHFL) heaved a sigh of relief after the Bombay High Court allowed the stressed mortgage financier to make payments to banks and Non-Banking Financial Companies (NBFCs) that have securitization arrangements with the DHFL.

The order came after a group of lenders, including the State Bank of India, Bank of Baroda, Standard Chartered Bank, Canara Bank and IDFC First Bank, approached the court. Two NBFCs, Aditya Birla Home Finance and Aditya Birla Finance, were also among the firms that joined the high-street lenders.

On Wednesday, Justice AK Menon, while modifying his earlier order, said that DHFL shall make payments to banks and NBFCs with which it has securitization and loan assignment agreements.

It was argued by the lenders that the order of the Bombay High Court on October 10th applied only to creditors, and they can’t be classified as one as they owned the pool of assets securitized by DHFL.

DHFL had further said in the same exchange filing that it continues to have strong collections and adequate liquidity to pay its fixed deposit holders. However, as a consequence of the two orders and pending further directives from the Bombay High Court, the company was unable to make these payments.

On November 5, DHFL had urged SBI, Union Bank of India to help lift a moratorium on repayments so that it could begin repaying its depositors.