DHFL default impact on credit-risk funds

Tue, 12 May 2026 00:00:00 +0000

The DHFL default and its impact on credit-risk mutual funds unfolded through 2019 and 2020 as Dewan Housing Finance Corporation Limited (DHFL), at its peak India’s third-largest private housing finance company, progressively ceased to service its market borrowings, ultimately triggering the first use of the Insolvency and Bankruptcy Code (IBC) against a financial services entity. For Indian credit-risk funds and other debt mutual fund schemes that held DHFL’s non-convertible debentures (NCDs) and commercial paper, the episode produced significant NAV write-downs, accelerated redemptions, and reinforced the market’s already-heightened post-IL&FS scepticism about the creditworthiness of non-bank lenders. The episode also produced SEBI’s first large-scale enforcement exercise around credit risk classification and side-pocket usage.

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DHFL default impact on credit-risk funds