Resumption of normal business operations, albeit on a smaller scale, is aimed at strengthening DHFL’s credentials as a ‘going concern’ and eventually helping secure better valuations at the closure of the ongoing resolution process.
Central bank- appointed administrators at DHFL have decided to lend about Rs 500 crore every month beginning the next few weeks, two people with direct knowledge of the matter told ET. DHFL is estimated to have net monthly inflows of about Rs 800 crore.
DHFL did not reply to ET’s mailed query.
“In October, the consortium of lenders led by the State Bank of India granted the permission to resume lending,” said an executive associated with the resolution process.
The thinking behind the move is that a financial services company remains in the limelight as long as it keeps lending, which is the key business for a financier.
“It has to be operational and only then will it get its right valuation from new buyers,” said a senior banker.
Earlier, the erstwhile management of DHFL also sought fresh credit lines to resume lending well before Mint Road superseded the existing board, moving the company into administration.
The National Company Law Tribunal’s (NCLT) Mumbai chapter admitted DHFL for insolvency resolution on December 2 and appointed R Subramaniakumar as administrator of India’s first financial services company to be put into administration under the new bankruptcy law.
The RBI appointed EY India as an advisor to the administrator, and AZB & Partners as legal advisors, ET had reported earlier.
After DHFL was put into administration, large conglomerates such as the Adani Group, Piramal Group, and Apollo are said to have shown interest in acquiring the financier.
Bankers expect to resolve the matter in the next three to six months.
Administrators are also working on a retention plan after the indebted company lost about 3,000-4,000 people over the past one year, ET reported on December 23.