Mortgage lender Dewan Housing Finance Corp Ltd (DHFL) on Tuesday said it had cleared interest of Rs 961 crore due on non-convertible debentures (NCDs), a week after it delayed payments and fanned fears of a liquidity crisis.

DHFL is part of the country's shadow banking sector which has been struggling since a series of defaults at lender Infrastructure Leasing and Financial Services Ltd last year.

Last week, rating agencies ICRA and CRISIL downgraded DHFL's commercial paper to their lowest level after it missed payments on bonds.

The company also said on Tuesday it will seek rating upgrades from agencies now that it had cleared all its dues on NCDs.

In May, DHFL stopped taking new deposits and blocked premature withdrawals following a credit rating downgrade as the National Housing Bank, which regulates mortgage finance companies, does not allow firms to raise deposits if they do not have an investment grade rating.